CIC Insurance targets Sh5 billion corporate bond to fund expansion

Muchemi Ndungu (left) Association of Insurance Brokers of Kenya Chairman in conversation with CIC Group CEO

CIC Insurance plans to raise Sh5 billion through a corporate bond issue to fund its ambitious regional expansion plan.

The proceeds of the bond issue will also be used to bolster the capital requirements of the insurer's subsidiaries and support investments in the medical and real estate projects.

The company is looking to incorporate subsidiaries or enter into joint ventures as it seeks to expand its current business in the African continent.

Chief Executive Nelson Kuria said the insurer has already set up offices in South Sudan and plans to enter the Ugandan and Malawian markets through joint ventures.

Kuria said CIC has already identified strategic partners in Uganda and Malawi with hopes of commencing operations in these countries by the second half of this year.

"We are looking at South Sudan, Uganda and Malawi," Kuria told The Standard in a telephone interview yesterday.

The offer for the initial tranche of the bond issue fixed at Sh3 billion with a green-shoe option of Sh2 billion opened on September 19 and will close on October 3.

He, however, explained that the second tranche of Sh2 billion would be raised in two years time if the full amount is not realised in the first round.

"In two years time, we shall raise the remaining amount," explained Kuria.

The five-year bond with a coupon rate of 13 per cent payable semi-annually will be listed on the Nairobi Securities Exchange (NSE) on October 15.

The issue's lead arrangers and placement agents are NIC Capital and Kingdom Securities. Co-operative Bank has been picked as the receiving bank.

CIC Group's subsidiaries include CIC Life Assurance Ltd, CIC General Insurance Ltd and CIC Asset Management Ltd.

Last year, the Group's gross premiums rose 23 per cent to Sh11 billion, up from Sh9 billion recorded in the previous year, as the insurer sustained its efforts to deepen its market share.

Profit before tax grew marginally by one per cent to Sh1.67 billion, up from Sh1.65 billion. Total assets rose 21 per cent to Sh17 billion from Sh14 billion, while shareholders' equity rose 22 per cent to Sh6.7 billion from Sh5.5 billion in a similar period.