CIC Insurance Registers KES 478 Million Profit Before Tax

CIC Insurance Group has registered 478 million shillings profit before tax for the year ended 31^st December 2017.

The results reported a 1.5 times growth against the expected 2.7 times growth in PAT.

The difference was attributed to higher claims uptick FY17E; 14.7 percent yearly while actual results indicate a 21.4percent yearly uptick. The bottom-line was supported by a 20.6 percent annual growth in net earned premiums (NEP).

The estimated NEP was higher by 5.1 percent than the actual while expected total income was 0.3 percent lower than the FY17A results.

Policyholder claims rose 21.4 percent yearly while operating expenses had an annual increment of 6.7 percent.

A dividend of 0.12 shillings per share is recommended to shareholders on register by 21^st May 2018. The counter trades at a P/B of 1.9 times compared to the industry median of 1.13 times.

The SELL Recommendation was maintained with a Target Price of 3.13 shillings. This represents a 44.1 percent downside potential.

The Company posted impressive Growth Earned Premium (GEP) year to year growth of 21.3 percent to 14.3 billion shillings, which came in line with the estimates 24.2 percent yearly. Net earned premiums rose 20.6 percent to 12.1 billion shillings. This implies a cessation rate of 15.6 percent in line with the FY17E of 15.4 percent.

Based on the Insurance Regulatory Authority (IRA) Kenya FY17 statistics, CIC’s General Insurance business market share rose by 122bps in the year to 8.1 percent.

The investment income grew by 18.6 percent to 1.54 billion shillings. Investment income contributed 10.0 percent to total income from 10.9 percent in the 2016 financial year. This was attributed to gains from the equities market in addition to stable returns from fixed income and rental income.

There was a notable increase in equity investments, 38.5 percent yearly, and in Government Securities, 30.2 percent. On the other hand, fees and commissions income recorded a 57.5 percent jump to 1.0 billion shillings.