Claim control has helped Berhan Insurance, one of the nation's younger insurance firms, to register a 114pc profit increase in the past fiscal year.

Berhan, which lost seven million Birr two years ago, netted 20.6 million Br profit in the last fiscal year, which allowed the firm to increase shareholder returns to 22pc of par value, as compared to the previous financial year's rate of 10pc.

A portion of the profit, 16 million Br, was disbursed as dividends to the insurer’s 1,600 shareholders.

A massive surge in underwriting surplus, higher interest and dividend income paired with a reduction in claims paid aligned to improve the firm's performance.

Daniel Wondimu, board chairperson of Berhan, asserts that the success came while going through various challenging scenarios.

“The year was filled with unexpected political changes, which resulted in an economic slowdown. Despite these scenarios, Berhan has registered growth,” Daniel said.

Berhan’s underwriting surplus, total premiums paid by policyholders minus claims paid, grew by 86pc to reached 34.3 million Br.

Gross written premiums, the total revenue before deductions for reinsurance or ceding commissions, also increased by a modest rate of five percent to hit 104.3 million Br.

Out of the total premiums the firm amassed, it managed to retain 81.9pc. The seven-year-old firm's retention rate was higher than most of the other insurance companies.

This was achieved as the firm improved its risk-absorbing capacity, according to Alemayehu Tefera, CEO of Berhan Insurance.

“Last year we were largely able to cover most of the risks we insured,” Alemayehu told Fortune.

Berhan’s retention has led to a decline in commission income by the firm. Last year Berhan earned 5.3 million Br from commissions, a decrease of three percent, and paid out 4.5 million Br, a decrease of four percent.

Reduced claims is also the other key factor that helped the firm to enjoy a profit bonanza. Claims paid decreased by 19pc to 66.6 million Br.

Increased incomes from interest and dividends as a result of investment activities in time deposits and company shares pushed profits higher. In the reported time, the firm earned 16.1 million Br and 5.02 million Br from interest and dividend income, respectively.

The income was generated from 135.4 million Br Berhan held in time deposits and 44.52 million Br from investments in shares and bonds.

Increase in income, however, was accompanied by a substantial rise  in expenses.