Kenyan-based CIC Insurance Group has lent its Ugandan subsidiary Shs3.2b loan to shore up its capital adequacy process.
Government, under the Insurance (Capital Adequacy and Prudential Requirements) Regulations, 2020 increased the paid-up capital for all insurance operators by almost 200 percent to build their capacity in handling risks, such as absorbing significant unexpected losses and providing for different degrees of supervisory measures.
Mr Nathan Ainembabazi, the CIC Africa Uganda deputy finance manager, said that whereas they had met the new capital requirement of Shs4.5b for its life insurance unit last year, the capital adequacy had remained low, necessitating a boost in cash reserves by obtaining a loan from its parent company.
The group, details indicate, obtained Shs96.2b from Co-operative Bank in 2022, part of which was lent to the Ugandan subsidiary to maintain it operations given that its revenues had decreased due to implementation of the new insurance international report standards.
The new reporting requirements under IFRS 17 have impacted a number of companies with the likes of NIC Holdings’ profits plunging by 25 percent as of December 2023.
Global accounting firm KPMG has reported that many insurance companies have seen an increase in insurance liabilities as a result of IFRS 17 due to various valuation approaches, which decreased shareholders’ equity and necessitated the need for additional capital.
Financial details indicate CIC Insurance Uganda reported a 31 percent increase in revenue from Shs11.12b in 2022 to Shshs14.54b in 2023, investment return rose from Shs1.2b to Shs1.6b.
Data also indicates that the insurer’s assets expanded from Shs17.3b to Shs23.19b due to an increase in deposits with financial institutions, intangible assets, and assets from reinsurance contracts.
Source link : https://www.monitor.co.ug/uganda/business/markets/cic-insurance-gets-shs3-2b-loan-to-recapitalise–4662506
Author :
Publish date : 2024-06-19 05:14:33
Copyright for syndicated content belongs to the linked Source.