CIC Insurance Group has maintained a Sh0.13 per share dividend amounting to Sh340 million after posting a record Sh1.44 billion net profit for the financial year ended December 2023.
The record profit was the first full year under new accounting rules dubbed International Financial Reporting Standards (IFRS) 17 that in January last year replaced IFRS 4 which had been in use for 18 years.
The new standard saw CIC restate its 2022 net profit to Sh157.14 million from an earlier reported figure of Sh1.09 billion. The restatement was to make last year’s performance comparable with that of 2022, under IFRS 17.
“The restated audited financial statements are based on the new accounting standard, IFRS 17 on insurance contracts, which has been adopted by the group as of January 1, 2023. Comparative periods have been restated to reflect the application of the new accounting standard,” said CIC.
The Sh1.44 billion net profit beats the previous record of Sh1.14 billion that CIC posted in 2015, which was a performance that was attributed to business realignment in general business, group life business and investment portfolio in that year.
CIC said the Sh340 million proposed dividend, which is the same as that of the previous year, will be paid on or about July 8, 2024, to shareholders registered on the group’s register at the close of business on June 4.
Top shareholder, Co-operative Insurance Society Limited, will receive Sh252.6 million as dividends for its 74.3 percent stake while Cooperative Bank of Kenya chief executive Gideon Muriuki will get Sh18 million for his 5.3 percent stake.
Insurance service results, previously disclosed as net earned premiums, hit Sh788.23 million last year compared with negative Sh553.88 million in the previous year, driven by 22.7 percent rise in insurance revenue to Sh25.4 billion.
Net investment returns, which is money received from investments such as government securities, fixed deposits and property, rose 24.4 percent to Sh2.2 billion from Sh1.76 billion.
CIC Life Assurance posted Sh872.94 million net profit compared with a net loss of Sh278.7 million in the previous year while CIC General Insurance’s net profit hit Sh911.1 million from Sh359.6 million.
The group, which has operations in Kenya, Uganda, South Sudan and Malawi, had delayed the release of consolidated results past the April 30 deadline citing the significant changes that IFRS 17 introduced to the accounting and reporting of insurance contracts.
The new standard demands that insurers measure insurance contracts using updated estimates and assumptions that reflect the timing of cash flows and any uncertainty relating to insurance contracts.
IFRS 17 involves “intricate calculations and projections, often demanding substantial computing power and software”, according to accounting firm Deloitte, which earlier in the year recommended artificial intelligence-driven algorithms to accelerate the calculation process.
Insurers have struggled to meet the terms because of the huge budgets required to purchase new software, costing between Sh15 million and Sh100 million depending on the size of the business, number of products and markets of operation. They have also had to retrain staff and hire consultants to guide in the shift in an industry where many insurers are posting losses.
