This archive report was first published on 29 July 2019.
On July 29, 2019, CIC Group's net profit plummeted by 96 percent in the half year ended June, largely due to significant losses in the life insurance business.
The Nairobi Securities Exchange-listed firm reported a net earnings of Sh20.9 million in the review period, a stark contrast to the Sh537 million recorded the year before.
According to CIC, the sharp profit decline was primarily attributed to losses in its life business, which were occasioned by adverse group life claims that are not expected to repeat.
Claims rose by eight percent to Sh5 billion, while operating expenses increased by 4.5 percent to Sh3.2 billion, negatively impacting the bottom-line in the period when net premiums and investment income remained flat.
Net premiums rose by 0.4 percent to Sh7.1 billion, while investment income declined by one percent to Sh1.6 billion.
Subdued investment environment and yield curve deterioration have also resulted in high actuarial reserves, CIC stated.
The company's general insurance unit and its asset management arm reported pre-tax profits of Sh326 million and Sh104 million respectively in the review period.
CIC's regional subsidiaries, which have been in multi-year losses, made an aggregate pre-tax profit of Sh50 million in the same period.
The company's performance could lead to a profit warning for the full year ending December if there is no major profit booked in this second half of the year.
However, CIC could register a major windfall if its efforts to sell a total of 712 acres succeed, which could earn it upwards of Sh10 billion.
