CIC Insurance Group (CIC.ke) 2018 Annual Report

We have extracted below the Chairman’s Statement from the 2018 annual report of CIC Insurance Group (CIC.ke), listed on the Nairobi Securities Exchange:

On behalf of the CIC Insurance Group, I am pleased to present to you the Annual Report and Financial Statements for the year ended 31st December 2018. Broadly speaking, the economic environment in 2018 had a noticeable shift from 2017, owing to the country’s stability and favourable weather conditions. The macroeconomic factors enabled business continuity and some element of growth across various sectors, leading to the economy expanding by 6% at the end of the third quarter, compared to 4.7% registered the same period in 2017.

The stable conditions however did not translate to growth in the insurance industry. As at the third quarter of 2018, General Insurance premiums had only grown marginally by 1.7%, to close at KShs 101 billion while Life Insurance premiums had risen by 3.9%, closing the quarter at KShs 62.8 billion. This was on the backdrop of fraudulent claims which affected many industry players especially those operating general business.

CIC Group gross written premium in 2018 grew by 12% from KShs 14.9 billion to KShs 16.6 billion. Profit before tax for the year grew by 64% to KShs 852 million from KShs 519 million in 2017. The group’s asset base grew by 8% to KShs 32.9 billion from KShs 30.5 billion.

Our General business registered a 1% growth in gross written premiums, from KShs 10.1 billion to KShs 10.2 billion as at close of 2018. CIC General profit before tax grew by 88% to KShs 630 million from KShs 335 million. These results followed an analysis at the beginning of 2018 which indicated a likely increase in risk based capital requirements, slowdown in business which would lead to undercutting, and low returns in investments. We then embarked on strategies that focused more on profitability, debt and fraud management which lead to a significant improvement in the results.

Our long term business, CIC Life Assurance gross written premium grew by 23% from KShs 4.1 billion to KShs 5.1 billion. Our growth was mainly organic with cooperatives being a major contributor towards group life business. Profit declined by 16% from KShs 224 million to KShs 188 million. This was as a result of reserves for our annuity business, and poor performance of equities at the Nairobi Securities Exchange (NSE).

CIC Asset Management maintained a strong performance closing the year with KShs 39 billion of assets under management, compared to KShs 32 billion in 2017. Profit before tax was KShs 126 million from KShs 85 million. Total income was KShs 336 million from KShs 262 million. The growth in CICAM was mainly as a result of our marketing efforts, good customer service, and support from key segments such as cooperatives.

Unlike a number of our competitors, CIC did not issue a profit warning in the period under review owing to the great support from our customers, prudent underwriting and effective strategies implemented by the company. As a result of the financial performance, the board recommends paying a dividend of 13% (2017,12.5%).

FUTURE OUTLOOK

As a company that has served the market for 50 years, we still have a lot to accomplish. We are a mature and vibrant brand aiming to take over the market through well thought out strategies. Technology is a critical component in our business. We have invested, and will continue to invest on technological systems that provide efficiency and value to our customers. The e-Oxygen for instance is a system that has contributed to the growth in medical business. As a result of this and other measures, medical business has consistently registered profits in the last two years.

We recognise the role of customers in growing our business. In essence, everything revolves around the customer. This is why we continue to reflect on the customer journey, and implement measures that improve the customer experience. Our strategic focus includes understanding and being responsive to customer needs in order to provide unmatched services. We continue to enhance relationships in all our market segments to help us achieve this.

Our journey towards the next 50 years will require building strategic partnerships with like-minded organisations. This will allow us to break into new and existing markets, as well as provide learning opportunities in these markets. These partnerships will enable us to understand the market better, including success factors that will drive our services further as we aim for the market leader position.

As an insurance and financial investment provider, we are an important player in the cooperative sector and intend to continue the good work in building the cooperative movement. CIC is committed to deepening financial inclusion by offering insurance and financial investment solutions that appeal to a wide range of customers. Our mission is to enable people achieve financial security. As we look forward to the future, our promise is that we shall continue to provide the right financial solutions to enable people achieve financial independence, and empower them to achieve their dreams, which is a goal shared by cooperatives.

Thank you.

Japheth Magomere OGW, Chairman CIC Group