CIC Insurance Group made a net profit of 188.1 million shillings in the period that ended 31 December 2016 as compared to a net profit of 1.1 billion shillings on the same period in 2015.
The Group pointed out that the 83.4 percent drop was as a result of the devaluation of the South Sudan Pound as it took a 297.5 million shilling hit from debasement of the South Sudan Pound in the wake of hyperinflation in the country, where it operates a subsidiary. The cost of living in that country country surged above 800 percent last year, eroding the value of assets in that market including the local currency
New insurance regulatory rules that were introduced in the market last year also contributed to the drop of the company’s profits as it had to increase its reserves for the life business by704 million shillings as mandated by a new methodology from the Insurance Regulatory Authority (IRA).
According to a statement, Gross Written Premiums were up by 7.8 percent from 11.4 billion shillings in 2015 to 12.3 billion shillings in 2016. Net earned premiums were down by 6.5 percent from 10.728 billion shillings in 2015 to 10.031 billion shillings in 2016.
Investment income on the other hand dropped by 16.2 percent from 1.537 billion shillings in 2015 to 1.287 billion shillings in 2016. Effectively Total Income dropped by 765 million shillings, a 5 percent drop from 13.826 billion shillings in 2015 to 13.060 billion shillings in 2016.
CIC noted that its earnings also suffered from 143-million-shilling paper losses on its holdings of depressed listed equities, aggressive provisioning of 326 million shillings for debtors in the general insurance business and 89 million shillings spent on compensating schools that were set on fire last year.
Despite the weaker performance, CIC maintained a dividend payout of 0.105 shilling per share. The company will pay a total dividend of 274.6 million shillings which is greater than its net earnings in the period, indicating it may dip into its retained earnings to make the disbursements.
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