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CIC Insurance has paid Sh1.33billion to Co-operative Bank of Kenya as partial settlement of a multibillion-shillings loan extended to it by the lender, lowering its annual debt service burden. The paid amount was the proceeds of a land sale deal by CIC Insurance.

The insurer, which closed 2025 owing Co-op Sh4.92 billion, says it paid the Co-op Bank the Sh1.33 billion from the Sh1.8 billion it received in February this year from the partial sale of land in Kiambu and Kajiado. Co-op Bank owns a 24.82 percent stake in the insurer.

‘Subsequent to year-end, the group completed the sale of a portion of the secured land, and applied proceeds of approximately Sh1.33 billion towards repayment of the loan,’ said the insurer in the latest annual report.

The payment has cut the outstanding loan amount from the Sh4.92 billion it reported in its books at the end of December 2025. The reduction looks set to cut its loan servicing burden from the current over Sh500 million per year.

CIC spent Sh680.31 million on interest payments on the loan in 2025 and now eyes a reduced annual burden of debt servicing with the partial payment. The Sh1.33 billion repayments are equivalent to 27 percent of the outstanding loan, whose payment has been rescheduled several times.

CIC tapped the Co-op loan using the Kiambu land as collateral. The borrowing was at a fixed interest rate of 12 percent with a tenure of five years and was due for repayment on October 15, 2024. However, the repayment was pushed forward.

The loan was structured as a single draw-down with a bullet repayment of the principal sum at the end of the tenure, and also attracts interest repayment thrice a year.

CIC tapped the loan for repaying a Sh4.5 billion corporate bond. The loan is secured by 200 acres of land in Kiambu, which the insurer valued at Sh4.99 billion in its books at the end of December last year.

The insurer said it closed last year with deposits amounting to Sh719 million, which it received from potential buyers. CIC explained that the amount is held as payables until the revenue recognition criteria are met.

CIC had lagged on Co-op loan repayments, closing last year with principal instalments relating to two quarters.

‘The loan, therefore, had repayment delays on principal, although interest obligations were fully serviced during the year,’ said the insurer.

In 2024, CIC received an extension from Co-op Bank to reschedule the loan repayments by a month. The company received another extension to reschedule repayments by a further two months to mid-January 2025 after missing the initial timeline.

The two extension periods were to allow the parties to agree on the new restructuring terms for the loan repayment, as the sale of the Kiambu land was delayed.

CIC launched the process of selling the Kiambu land in November 2022. Delays in the process forced it to reschedule the loan.

Maritime and transit insurance premiums grew at the slowest pace in four years in 2025, reflecting gaps in enforcing rules that require all imports to be insured locally.

Fresh data from the Insurance Regulatory Authority (IRA) show that maritime and transit insurance premiums grew by about 2.9 percent last year, well below potential given Kenya’s expanding import bill.

Comparatively, provisional data from the Kenya National Bureau of Statistics show that Kenya’s import bill rose to Sh2.79 trillion in 2025, up from Sh2.69 trillion the previous year, representing growth of 3.55 percent. This divergence between premium growth and import expansion points to lost underwriting opportunities.

IRA data show that marine and transit premiums rose to Sh4.8 billion in 2025, from Sh4.66 billion in 2024, marking the slowest growth since 2020 when the sector was hit by Covid-19 disruptions.

The slowdown comes despite the IRA and Kenya Revenue Authority (KRA) teaming up in February last year to enforce rules aimed at boosting uptake of local marine insurance.

However, implementation faced headwinds, first from system hitches and, secondly, weak enforcement by both KRA and IRA.

Marine insurance policies protect goods against risks such as loss, damage and theft during transit by sea, land and air from the port of origin. The cover shields importers from losses and gives financiers confidence to lend to businesses ordering goods.

Enforcement gaps

The joint enforcement effort by KRA and IRA had been expected to boost compliance with amendments to the Marine Insurance Act (Cap 390) and the Insurance Act, which outlaw the sourcing of marine cargo insurance from insurers not licensed locally.

The changes took effect on January 1, 2017, but compliance has remained low, as KRA has continued clearing imports regardless of whether the marine cover is sourced locally or abroad. Association of Kenya Insurers (AKI) chief executive Tom Gichuhi said the practice persists despite recent directives.

‘We have done everything right as an industry, including developing the right products, but for as long as there is a gap in enforcement, the story will remain the same,’ said Mr Gichuhi.

‘Whatever system is built, if KRA is not on board to enforce it, it will never work. Until a marine insurance certificate from a local insurer is made a mandatory pre-shipment document, nothing much will change,’ the AKI boss added.

KRA had said that, effective February 14, 2025, all importers would be required to digitally procure marine cargo insurance cover from locally licensed insurers before obtaining customs clearance.

The taxman indicated that importers would request digital marine cargo insurance certificates through clearing agents, mobile apps, dedicated portals or underwriters’ platforms linked to the IRA electronic system.

The processed certificate from the IRA platform was to be submitted electronically to KRA’s Integrated Customs Management System (iCMS), the key platform for clearing import and export cargo.

However, the rollout proved problematic, with many imports still arriving with cover sourced from the country of origin.

Marine insurance premiums recorded their fastest growth in 2017, rising by 34.4 percent to Sh3.63 billion following the introduction of compulsory local sourcing. The segment then declined for three consecutive years before returning to growth in 2021, according to IRA data.

Kenya’s value of principal imports reached Sh2.706 trillion in 2024, up 3.6 percent from Sh2.611 trillion a year earlier and 64.7 percent higher than Sh1.643 trillion five years earlier. Insurers say this indicates the sector’s untapped potential in marine cover.

Kenya has opted out of fully drawing a Sh193.8 billion ($1.5 billion) loan facility from the United Arab Emirates (UAE) due to its high pricing.

An official from the Treasury has indicated that the financing facility is now out of the picture, due to high costs as the country sees the scope for cheaper funds from institutions such as the World Bank.

Kenya already drew Sh64.6 billion ($500 million) from the facility in the last financial year but will now sit out of unlocking the Sh129.2 billion ($1 billion) balance.

The country reached an agreement with the UAE for the seven-year facility which is priced at an 8.25 percent interest rate and accessed a part of the funds in April 2025, amid prevailing high interest rates in international capital markets and the lack of concessional financing.

‘The $1 billion Abu Dhabi financing is out of the picture because of high pricing,’ the Treasury source told the Business Daily.

The UAE facility was previously seen as a lifeline for Kenya especially after the cancellation of the International Monetary Fund (IMF) multi-year programme in March 2025 and delays to fresh disbursements from the World Bank Development Policy Operations (DPO).

The loan arrangement was also reached at a point when international investors were demanding a steeper return to buy/hold Kenya’s debt at the pronouncement of US tariffs which caused jitters around the world.

Market access has since improved for Kenya including the international capital markets with Eurobonds yields sitting in the single digits’ territory.

Yields on the 10-year Eurobond maturing in 2028, the six-year 2031 Eurobond and the 12-year 2034 Eurobond closed last week below the 8.25 percent coupon rate for the UAE loan at 7.32 percent, 8.11 percent and 8.12 percent respectively as of Thursday April 16.

The UAE loan was the first commercial financing arrangement from the Gulf, with the government having previously relied on Eurobonds and syndicated loans, mostly from Western lenders, for commercial debt.

The UAE has had a growing influence in Kenya under the Kenya Kwanza administration, mainly through State-level business ties.

In March 2023, Kenya entered into a direct petroleum importation agreement with the UAE and Saudi Arabia, dubbed the government-to-government oil deal, at the height of a dollar crisis in the country.

The UAE also provided a private jet used by President William Ruto during his four-day State visit to the US in May 2024.

In May of the same year, the Gulf State pledged Sh245.4 billion ($1.9 billion in aid to Kenya to manage the effects of widespread flooding.

Previously, Treasury Cabinet Secretary John Mbadi said that Kenya was under no obligation to take up the balance of the UAE loan despite closer ties, insisting that the country would take up cheaper loan options if available.

‘We are not tied to one specific financing because of an arrangement. We will only take it if it makes economic sense,’ he said.

‘If the World Bank DPO is available, it would be at concessional rates. If we can also get debt for development swaps or Samurai bonds, these would also be better options.’

Kenya estimates its net external financing requirement for the fiscal year to June 30, 2026, at Sh225.8 billion or an estimated 1.2 percent of gross domestic product (GDP).

Net domestic financing is expected to fill the bulk of the 6.4 percent fiscal deficit at Sh998.6 billion or 5.3 percent of GDP.

The World Bank DPO financing is expected to play a significant role by providing the cheapest external financing option while also slightly putting checks on the relatively costlier domestic borrowing sources.