Building on its success over the past four years, Tsehay Insurance registered another growth in profitability. Yet its earnings per share (EPS) showed a notable decline last fiscal year.

Despite the 12pc increase in profit after tax of 32.8 million Br, its EPS declined to 34 Br from 37 Br, due to a rise in claims paid and paid-up capital.

In the reported period the company increased its paid-up capital by 26.9pc to 110.8 million Br. It also spent 165.7 million Br in claims and other technical provisions, a 13pc growth.

The increase in claims paid in terms of the frequency of motor accidents coupled with the level of severity of the damage that raised the price of spare parts pushed the claims higher, according to Kassa Lisanework, CEO of Tsehay, which was established seven years ago and currently has 216 employees and 160 shareholders.

However, Abdulmenan Mohammed, a financial analyst based in London, United Kingdom, applauds the management of the company for achieving solide performance, saying that the claim growth is reasonable and the management should carefully watch claim growth despite the reasonable rise.

Mandefro Erkou, the chairperson of the board of directors of Tsehay, remarked that the positive performance was achieved despite a formidable challenge in the last fiscal year mainly related to the political unrest.

"It distressed the performance of the insurance industry as a whole," he told shareholders in the annual report of the company.

A modest increase in premiums, a surge in commission earned, reduction in premium ceded and increase in dividend income helped the company to increase its net profit.

Underwriting surplus increases by 35pc reached 34.6 million Br, while the gross written premium grew by five percent to 300 million Br. Out of this, Tsehay was able to retain over 245 million Br, helping the company to increase the retention rate by three percentage points to 82pc.

Tsehay earned 9.7 million Br in commission, a nine percent increase against the 12pc rise in paid commissions to agents that reached 23.3 million Br.

The higher rate of growth in commissions compared to the growth in written premiums must be a result of tough competition in the insurance industry, the expert remarked.

Interest and dividend income showed a percentage point and 44pc surge to 22.5 million Br and 6.8 million Br, respectively. The company invested in shares at United, Abyssinia and Berhan banks, and Ethio-Reinsurance, among others.