18 November 2012

Ethiopia: NIB Insurance Increases Its Profit After Tax By Half

Faced with a new insurance landscape that came out over the past fiscal year, Nib Insurance Company (NIC) looks confidently into the future by increasing its net profit after tax by half and Earnings per Share (EPS) by 35pc in 2011/12 compared with the previous year.

The insurance company established ten years ago reported an EPS of 243 Br from a highest ever profit after tax of 35.2 million Br, a huge improvement upon the previous year's profit after tax of 23.5 million Br and EPS of 180Br. NIC announced this increase during the 10th annual general shareholders assembly on November 10, 2012 at Millennium Hall.

Despite many challenges in the insurance business, our performance grew impressively, Sirj Abdella, board chairman of the company told shareholders at the meeting.

The mandatory third party insurance, one of the challenges to insurance sector introduced last year requires all vehicles on the country's roads to get insured against third party risks increased claims paid during the fiscal year.

The total claims paid during 2011/12 amounts to 135.6 million Br, which saw 45pc increment from the previous year. Out of the total claim paid, the amount paid in respect to motor class of business has continued to take the lion's share.

During the fiscal year, the company paid 95.2 million Br, which is 69.5pc of the total, for the motor class of business while the rest goes to fire & burglary, house breaking, liability, personal accident and marine class of businesses.

Even if the amount of money paid for claims increased by 45pc, the company achieved 54.8pc increment in its premium income just from non-life insurance business in 2011/12.

The major contributor for the increment in premium was motor class of business, which brought 167.2 million Br for NIC. This amount is almost half of the total premium collected by the NIC last year. This allowed the company to achieve a total gross premium of 349.6 million Br and under writing surplus of 67.2 millionBr.

The investments in shares and saving account have performed as well.

Dividends on shares have increased by 26.3pc to 10.8 million Br and interest on savings has gone up by 53pc to 8.2 million Br in 2011/12.

NIB has an investment portfolio of 50 million Br in Nib International Bank (NIB), 356,000 Br in Agar Micro Finance and 2.1 million Br in ZEBIDAR Hulegeb Industrial, with a total balance of 52.4 million Br during the last fiscal year.

In order to achieve this, however, the company spent 41.7 million Br on staff and administration expenses, an increase of 14.3pc compared with the previous fiscal year. Out of the total staff and general administration expenses, 16.8 million Br spent on salaries and benefits, 5.94 million Br has been provided for doubtful debts and 19 million Br spent on office rent and other expenses.

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