CFC Stanbic to list insurance arm at NSE

CFC Stanbic Holdings has spun off its insurance business and will soon separately list it at the Nairobi Stock Exchange.

The company announced on Friday that the arm - CfC Life Assurance Ltd and Heritage Insurance Company Ltd (Kenya and Tanzania) - has been transferred to a new holding company, CfC Insurance Holdings Ltd (CfCIH), in readiness for listing by way of introduction.

“All factors remaining constant, we expect to list CfC Insurance Holdings Ltd by way of introduction at the NSE in the first half of next (this) year,” CfC Stanbic Holdings managing director Kitili Mbathi said when he first announced the process in December 2009.

The separate listing of the insurance firm which will see a new company joining the bourse since the Safaricom initial public offering, opens a window of opportunity for shareholders to increase or divest from the business. “It will give our shareholders the flexibility to decide which sector to increase or reduce their level of involvement,” Mr Mbathi, who is also the Standard Bank Group East Africa regional MD, said last year.

This is important given that CfC Stanbic Holdings recorded a 46 per cent decline in pre-tax profit in 2009 because of rising costs and a poor showing of the insurance business which hit its performance. The firm’s profit declined to Sh709 million from Sh1.3 billion in 2008 largely fuelled by a bear stock market and the purchase of a new core banking system last year.

The group holds a 60 per cent stake in CfC Stanbic Holdings, which is listed at the NSE and was formed following the merger of CfC Bank Ltd and Stanbic Bank Ltd. Besides the insurers, it also owns CfC Stanbic Bank Ltd, CfC Stanbic Financial Services Ltd and Stanbic Investment Management Services (East Africa) Ltd.

Also, under the ongoing complex four-step transaction, South Africa’s Liberty Insurance will enter the local market. “Subject to shareholder and regulatory approvals (in Kenya and South Africa)…Liberty will become the controlling shareholder and core strategic investor in CfCIH with a 56.82 per cent shareholding,” Mr Mbathi, said in an advertisement in sections of the media on Friday.

Kenyan shareholders will hold a 46 per cent stake. In exchange for acquiring the majority stake, the South African insurer will inject Sh880 million into the business to bolster its capital and reduce the level of debts remaining to a sustainable level. Incidentally, Liberty, South Africa’s third largest insurance company is a subsidiary of the Johannesburg headquartered Standard Bank Group, which holds a 53.7 per cent stake.