CIC resumes repayment of Sh4.5bn Co-op Bank credit

CIC general insurance managing director Fred Ruoro. FILE PHOTO | DIANA NGILA | NMG

CIC Insurance Group has resumed interest payment on a Sh4.5 billion loan owed to Co-operative Bank of Kenya following the expiry of a repayment break that was granted in the wake of Covid-19 pandemic disruptions.

The insurer discloses in its latest annual report that it, last year, paid Sh200 million to Co-op Bank as interest on the five-year loan, after the moratorium that started in 2021 lapsed in October 2022.

“The company obtained a moratorium of repayment of interest until October 2022. An interest repayment of Sh200 million was made during the year,” said CIC.

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The loan, with an initial value of Sh4.5 billion in 2019 when CIC took it to help repay its corporate bond, was worth the same amount as of December 2022 after accrued interest and repayments over the years.

The loan matures in September next year and carries a fixed interest rate of 12.5 percent, with the principal due in a single bullet payment at the end of the period. Interest repayment is made thrice a year.

Co-op Bank, which owns a 24.8 percent stake in CIC, had granted the insurer the break on interest payment to give it more financial flexibility in the wake of Covid-19 disruptions.

CIC secured the credit facility using a 200-acre parcel of land it owns in Kiambu County and wants to use the proceeds from the sale of this land to settle the loan.

The insurer had initially sought to sell the entire 200 acres to one buyer before it opted to subdivide the land. Currently, a quarter-acre plot is priced at Sh7.85 million.

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CIC had by end of December used Sh64.63 million to subdivide the plots and received Sh35.8 million as deposits from buyers. The deposits have been put into an escrow account at Co-op Bank.

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