CIC Insurance Group Plc is set to issue bonus shares worth Sh742.8 million in addition to its first and final dividend per share of Sh0.13 for the results of its financial year ending in December 2024.
The regional underwriter, which nearly doubled its 2024 full-year profit to Sh2.8 billion from Sh1.4 billion previously is set to issue shareholders with one additional stock for every 10 held for a total of 261.5 million extra shares of Sh2.84 each as of Friday’s prevailing price.
The bonus shares issue signals the financial strength of the company even as it held its dividend per share unchanged from 2023 at Sh0.13 per share.
“The board recommends a bonus share issue of 1:10 for the year ended December 31, 2024. The bonus shares will be allotted on or before June 18, 2025, to shareholders registered as of April 22, 2025. The register will also remain closed on April 23, 2025, for this purpose,” CIC said in a trading statement on Friday.
A bonus issue, usually funded through profits or existing share reserves, is an offer of free additional shares to existing shareholders, mainly to encourage more retail investor participation in their stock by lowering the price per share and adding liquidity.
A bonus share also provides an alternative to issuing a dividend payment for rewarding investors and also boosts the image of a company as financially sound.
The bonus shares issue is expected to lead to a lower price for the company’s stock, making it more accessible to smaller investors.
CIC’s stock price, for instance, fell by 3.5 percent in Friday’s trading session to end the day at Sh2.84 a piece from Sh2.94 at Thursday’s close.
Companies can opt out of distributing profits in their traditional form as cash by instead converting the payout into share capital through the issuance of bonus shares.
Bonus share issues at the Nairobi Securities Exchange (NSE) have been limited but the last such distribution happened last May when re-insurer Kenya Re doubled its floated shares by issuing one extra stock for each one held by its shareholders.
Other recent bonus shares issues include Car & General in January 2022, I&M Holdings in March 2019, and HF Group Plc in March 2018.
CIC is expected to pay its first and final dividend of Sh0.13 to shareholders on the same day as the allotment of the bonus shares issued.
The underwriter’s notable profit growth was anchored primarily on an 80.9 percent surge in net investment revenue as its income from financial assets before costs hit Sh8.8 billion from Sh2.9 billion a year before.
The higher investment revenues helped offset a 56.4 percent decline in insurance service revenues to Sh343.9 million from Sh788.2 million in 2023.
The firm’s insurance service result was dragged down by higher insurance service expenses which rose faster than insurance revenues to Sh24.2 billion from Sh22.5 billion a year prior.
CIC Insurance Group's total assets rose to Sh61.9 billion from Sh50.2 billion a year earlier on the growth of its financial investment assets.
