Johnstone Ole Turana

1 September 2010

CFC Stanbic Holding is seeking an exemption from the Capital Markets Authority (CMA) to enable it list its insurance business at the Nairobi Stock Exchange (NSE).

"We are in discussion with the regulator over certain requirements which we may not meet and are seeking exemptions to enable us list the insurance business ," said Mr Kitili Mbathi, the group managing director for CfC Stanbic Holdings.

CfC Insurance Holdings may not be able to meet all the conditions needed to list at the NSE.

CMA requires a firm planning to list to have, among other things, recorded positive profits for three years in the last five years of trading, have a minimum authorised, issued and fully paid-up share capital of Sh50 million and minimum net assets of Sh100 million.

For the CfC Insurance Holdings, which will consist of CfC Life Assurance, Heritage Insurance and CfC Investments consolidated results indicate that the new entity will meet the statutory requirements.

The consolidated financial results for the first half shows that the net assets stands at Sh5 billion against a requirement of Sh100 million while the paid up share amounts to Sh515 million against a base of Sh50 million.

New insurance regulation caps ownership at 25 per cent.

Liberty Insurance is expected to have a 60 per cent stake.

Prior to the merger, CfC Holdings which was the listed business entity, consisted of CfC Bank, CFC Life Assurance and CfC Financial Services.

Although it also had a stake in Heritage Insurance, Heritage was not part of the listed business.

When Standard Bank Group acquired a controlling stake in CfC Holdings it took over total control of CfC Bank, CfC Financial Services and CfC Life Assurance.

Heritage Insurance which has had minority shareholders was roped in later after the minority shareholders swapped for shares in the new CfC Insurance Holdings.

"Minority shareholders in Heritage Insurance ceded their stake by swapping for shares in CfC Insurance Holdings hence Heritage is now 100 per cent owned by CfC Insurance Holdings which has cleared the way for the planned listing by introduction at the NSE," said Mr Mbathi.

CfC Stanbic Holdings wholly owns the CfC Insurance Holdings which was formed following the merger between the previous owners CfC Holdings and Stanbic Bank, which is owned by Standard Bank of South Africa.

But to have an anchor shareholder, Standard Bank Group has roped in Liberty Insurance, its main insurance arm in South Africa which is expected to drive the business.

Financial data from the various business entities which will constitute the CfC Insurance Holdings shows mixed results.

Tax losses

For instance according to the financial report for CfC Assurance for 2009, it recorded after tax losses of Sh176 million.

The losses were occasioned by the huge impairment undertaken on the back of a subdued equities market.

Heritage Insurance recorded after tax profit of Sh161.9 million.

Life businesses incurred after tax losses of Sh61 million while short term business recorded after tax profits of Sh223 million which covered the losses from long life business.