Nile Insurance's net profit fell by nearly half last fiscal year and reached 63.5 million Br, the same figure it recorded in the 2015 fiscal year.

The firm's profit decline has also dragged shareholders return down to 272 Br a share, almost half of what it reported in the same period in the 2017 fiscal year.

Stagnating gross written premiums, an increase in the amount of premiums ceded to reinsurers, growing operating expenses and a considerable amount of money transferred to the life insurance fund caused the profit declines at the 23-year-old insurer.

“The life insurance business is not accounted for in the profit,” Nigusu Anteneh, CEO of the company, told Fortune. “This has affected the profit.”

Nile, which reports life insurance every other year, transferred 22.47 million Br to the life insurance fund, which is given as one of the reasons for the income decline last year.

The new reporting system, the International Financial Reporting Standards (IFRS), has also brought 15 million Br in adjustment from last year when it reported 101.7 million Br in net profit.

“In the preceding year, net income gained from financial guarantee bonds, close to 26 million Br, which was one of the factors,” Nigusu said.

The net underwriting for the period is decreased by nine percent to 93 million Br. While the gross written premium remained the same at 454 million Br, the firm retained 82.7pc of its premium, a three percent decline compared with the preceding year.

The CEO attributes the slight decrease in results to measures taken in underwriting.

“We took underwriting measures,” Negus told Fortune. “We were very selective of the risks we took.”

Mekdes Akililu, the board chairperson of the firm, affirms this in his remarks in the financial statement.

“The cautious moves taken by our company regarding risk selection and attempts to avoid the looming trouble has limited the growth in the company’s premium[s]," said Mekdes. "With the prudent moves, we trust our company will be better rewarded in the year to come.”

The company wrote 59pc of its total underwriting in the motor vehicle sector, followed by the liability and engineering insurance sectors.

The drop in written premiums follows a decline in claims incurred. Nile paid 233.6 million Br as claims in the reporting period.

“If it is not for the customs guarantee bond, the claims will show a substantial decline,” the CEO told Fortune.

Nile paid 20 million Br for customs guarantee bond in the reporting period while holding 18 million Br as a reserve.