The All Share and NSE 20 Indices retreated by 0.7% and 1.6% to close the day at 129.24 and 1733.14 respectively. Market turnover declined by 26.3% to KES 355.1 million as the number of shares traded declined by 24.2% to 14.0 million. Fahari I-Reit (+9.9% to KES 5.98), Uchumi (+6.7% to KES 0.32) and Kakuzi (+5.9% to KES 397) emerged as the top 3 gainers while Scangroup (-9.3% to KES 8.22), Sameer (-9.2% to KES 2.95) and TPS (-9.0% to KES 13.10) emerged as the top 3 losers. Overall, trading activity was relatively more balanced in today’s trading session with foreign and local investor participation at 49.0% and 51.0% respectively.
CIC Group Posts an After Tax Loss of KES 335.5 million for 1H2020
CIC Group posted an after tax loss of KES 335.5 million from an after tax profit of KES of 20.9 million in 1H2019.
The significant decline in profitability was primarily due to a 4.9% y/y decrease in total income to KES 8.3 billion, a 7.6% y/y increase in net claims to KES 5.4 billion and a 3.2% y/y dip in gross written premiums to KES 9.3 billion.
Total income fell by 4.9% y/y to KES 8.3 billion, as net earned premiums remained flat at KES 7.1 billion and investment and other income declined by 26.0% y/y to KES 1.2 billion.
Net claims and policy holders’ benefits grew by 7.6% y/y to KES 5.4 billion. The group’s loss ratio grew to 76.4% (1H2019: 70.9%). However, operating and other expenses declined 10.7% y/y to KES 2.9 billion (1H2019: KES 3.2 billion). As a result, total expenditures ratio grew marginally by 0.5% y/y to KES 8.3 billion. As a result, the combined ratio only grew slightly to 116.7% from 116.1% in 1H2019.
Finance costs reduced by 10.2% y/y to KES 302.1 million from KES 336.2 million in 1H2019.
Share of result of associate fell by 24.1% y/y to KES 2.2 million (1H2019: KES 2.9 million).
Looking ahead, we expect slight dip in premiums and collection difficulties as households and businesses operate under tighter budgets.
We also anticipate pressure on investment income as the equities and fixed income markets continues to face declining returns.
The group has witnessed a rise in claims the past 2 years, with a rise in long-term business claims in FY2018 followed by an uptick in medical claims in FY2019, further impacting the bottom line.
We expect the group to continue implementing cost cutting initiatives to mitigate bottom line risk.
Long Term Buy- KCB, Equity, Absa, Stanbic, NCBA
Sell- Stanchart, Bamburi, HF