Nib Insurance Company, one of 17 private insurance firms, paid out record high claims in the private industry during the last fiscal year.
The firm registered 308 million Br in claims in the last fiscal year, a 23pc increase.
In the reporting period, Nib's competitor United reported 232 million Br; Awash, 284 million; and Nyala, 163 million Br in loss payments.
"As an insurer, we must relieve our clients from risks," Zufan Abebe, the CEO of Nib told Fortune. "Nib paid clients with genuine claims."
Claim payments included 184.5 million Br for motor insurance, which reflected over half of the insurer's claims.
Abdulmenan Mohammed, a financial expert with over 15 years of experience, cautioned that the firm should give extra attention to claims.
"Nib should keep an eye on claims expenses," Abdulmenan said.
The bond insurance that was outstanding for over five years is the main reason for the surge, according to Zufan.
Though the firm's claims were high, Nib managed to increase its interest income by 11pc and recorded a net profit of 62 million Br. Shareholders return also rose to 124 Br per share, an 8.7pc increase from two year ago.
Zufan attributed the increase in premium underwriting as the significant reason that contributed positively to profit results.
In the fiscal year, Nib generated 478 million Br in premiums, a 14pc increase from its report two years ago. While ceding 93.1 million Br to reinsurers, the company retained 80.5pc of premiums, higher than the industry average of 77pc.
"As we took measures on contractor's bond insurance, we were able to retain a higher share of the premiums," the CEO says.
Nib also earned a decent income from commissions and investments, which stood at 26.19 million Br and 93.2 million Br, respectively.
It also owns 142.5 million Br in shares of Nib Bank, Ethio Reinsurance and Zhemar Hulegeb Industries; and other holdings in bank deposits and governments bonds that brought total of investment assets to 899.3 million Br.
A reasonable rise in expenses accompanied the income increase. Operational costs for Nib increased by 6.3pc to 102 million Br, while commission fees paid for independent insurance brokers and its 135 in-house sales agents stood at 31.6 million Br. About 1.5 million Br was also spent on training its staff of 416.
"The management of Nib should be appreciated for controlling expenses," said Abdulmenan.
In the past fiscal year, Nib opened two branches and one contact office. It also finalised the construction of a 132-million-Br building in Dire Dawa.
Last year was also a year when Nib introduced political uncertainty insurance policies, which were well received by clients, according to Zufan.
"The industry needs to work on competing by introducing new services, not by price cutting," said Zufan.
Though the company had a relatively successful year, it was not without challenges, according to Berhanu W. Giorgis, board chairperson of the firm.
The company's performance has been challenged with internal and external factors, according to Berhanu.
Nib faced challenges in rising rent fees, staff turnover, price-based competition and the nation's unrest, he said.
During the annual meeting, the shareholders agreed to double the capital. Established 16 years ago with 14 million Br in paid-up capital, Nib's assets and paid-up capital reached 1.3 billion Br and 250 million Br, respectively.