CIC Insurance Group is trimming part of its workforce through a voluntary early retirement (VER)/programme as part of a five-year (2021-2025) corporate restructuring plan seeking to bolster competitiveness, improve operational efficiency and free more resources to lift the regional financial services conglomerate to a higher growth trajectory.

The restructuring also focuses on balance sheet re-organisation, which has seen the group put up non-core assets, mainly land, on auction in order to concentrate on core business — insurance and asset management.

The EastAfrican understands that under the plan the regional insurer, which is listed on the Nairobi Securities Exchange, with operations in Kenya, Uganda, South Sudan and Malawi aims to remove at least 15 percent of the annual payroll costs and use the additional resources to support its growth and expansion programmes.

Read: CIC set for dividend payout after return to profitability“The voluntary early retirement scheme is a continuation of the functional and operational restructuring that the Group has been undertaking, now in its third year, which has sustained the growth momentum that the business enjoys,” the group says.“The exercise is projected to save at least 15 percent of the annual staff costs.”Staff costs which include salaries and allowances, Bonus Provision, Defined Pension Contribution Expense, Termination Benefits Expense and Leave pay increased by 15 percent to Ksh2.24 billion ($14.83 million) in 2022 from Ksh1.95 billion ($12.91 million) in 2021, with the number of employees increasing by 13 percent to 648 from 573 in the same period, according to the audited financial statements.

This conservatively puts the savings from the planned VER programme to at least Ksh336 million ($2.22 million).“The restructuring also ensures functional structure alignment to the corporate strategy in line with technological changes and digital strategies, improve productivity, increase operational efficiency, better customer services, among other benefits and ultimately improve return to shareholders,” the firm added.

Read: Corporate bond defaults alarm investorsThe CIC Group’s VER/Exit package, which affects staff in the group and its Kenyan business was disclosed to the staff during a Staff Town Hall meeting on November 3 and last week, the circular to that effect was made available to the employees.

The voluntary early retirement programme, however, comes at a time when the group is showing strong financial performance with key financial indicators such as return on equity and return on assets swaying at around 13 percent and 2.5 percent respectively.

The group’s net profit for the six months to June 30 more than doubled to Ksh705.45 million ($4.67 million) from Ksh263.06 million ($1.74 million) in the same period last year, with revenues from insurance and asset management business growing by 20 percent and 33 percent respectively.

Operating expenses declined by three percent to Ksh684 million ($4.52 million) as a result of prudent cost management during the period under review.

Last year, its net profit jumped by 64 percent to Ksh1.09 billion ($7.21 million) from Ksh668.43 million ($4.42 million) in 2021, with assets under management rising by 12 percent to Ksh46.7 billion ($309.27 million) from Ksh41.54 billion ($275.09 million).“The Group business is on a very good growth trajectory and is profitable, “the group says.

The group which is 74.3 percent owned by the Co-operative Insurance Society Ltd crafted the ambitious five-year blue-print dubbed ‘Recapturing CIC’s transformation agenda’ with a view of reclaiming its market leadership position across all its lines of business — General insurance, Life Assurance and asset management business.“CIC Group will continue with the transformation initiatives aimed at growth and improving the business performance. The key focus is to significantly improve the Underwriting profit for all our businesses in Kenya and the region,” according to the group’s 2022 annual report.“The Group continues to review and implement a functional structure to support the achievement of the overall objectives contained in our Corporate Strategic Plan.”Read: Private schemes to battle for slice of pension billionsLast year, CIC group recapitalised its Ksh495.53 million ($3.28 million) loan to its Uganda subsidiary, thereby increasing its total investment in CIC Africa (Uganda) Ltd to Ksh779.32 million ($5.16 million) from Ksh283.79 million ($1.87 million).

The investment was in the form of acquisition of additional ordinary shares in the Uganda subsidiary thereby increasing its interest in the subsidiary to 95 percent from 93 percent.

In 2021, the Uganda subsidiary did not return a profit but registered a loss of Ksh19 million ($125,827.81) due to increased provisions for doubtful debts.

CIC’s restructuring plan, which started in 2021, was mooted to revert the firm to a strong financial footing after posting a decline in profit in 2019 and plunging into a loss of Ksh296.83 million ($1.96 million) in 2020 largely due to muted activities on the NSE, which adversely impacted the group’s equity investments.

Its stock on the NSE was trading at Ksh2.11 ($0.01) per share by the close of the trading session on Tuesday (November 7). © Copyright 2022 Nation Media Group. All Rights Reserved. Provided by SyndiGate Media Inc. (Syndigate.info).
JAMES ANYANZWA