Fortune News | Nov 21,2018
The two-decade-old United Insurance has cheered up its shareholders by doubling its net profit in the last budget year.
Triggered by higher underwriting surpluses and investment returns, the shareholder return also doubled to 504.5 Br a share in the same period.
The company’s underwriting income after deductions for claims saw a 25pc rise. United earned additional revenue from the sale of its stake in Raya Breweries, where share values multiplied several fold since its initial investment in BGI Breweries.
“The gains from the Raya Beer shares directly added to profits,” says Meseret Bezabih, the CEO of United.
United Insurance was one of the early investors in Raya Beer, established in 2010 with 2,441 shareholders. The insurer gained 54 million Br from the sale of its shares in the brewery.
This income helped the insurance firm reverse the direction of shareholder return, which has been declining for the past three years.
The firm’s total gross premiums also saw a boost, increasing by 13.6pc compared to two years ago.
“This is a reasonable increase,” comments Abdulmenan Mohammed, a financial expert with more than 15 years of experience in the financial industry.
From its gross underwriting, the company retained more than three-fourths of its total production and transferred 20pc of it to reinsurers.
“The life insurance underwriting result was much better than the preceding years,” the CEO said - the company earned over 40 million Br from life insurance in the reporting period.
Founder and major shareholder of the firm, Eyesuswork Zafu, is excited about United’s performance in the last fiscal year.
“I am delighted with the result,” Eyesuswork, told Fortune. “Despite the hurdles and the competition challenges, the result is admirable.”
Claims paid by the firm increased by 18pc, reaching 232 million Br.
The expert believes that United should investigate its risk management system and implement a new system that will properly price high-risk customers.
Meseret, however, states that the company was able to manage its claim payments by segmenting its customer base.
“Our major clients are large companies who have a low claims profile,” Meseret said.
Also, claims rose accompanied by increases in employee expense benefits. Staff and general administration expenses rose by 26.8pc in the reporting year.
Last financial year, United opened several contact offices and branch outlets, and brought up its total employee number to 359. The attributed branch expansion and salary adjustment are considered the primary causes for the rise in expenses.
“With the aggressive expansion, rent cost and salary increases bolstered our expenses,” Meseret told Fortune.
Total assets of the firm are valued at 1.3 billion Br. United holds investments in time deposits, properties and company shares in excess of 600 million Br.
As a result of launching of the new reporting system - International Financial Reporting Standards, the value of some of the firm's assets have increased.
The value of the bank’s properties in the Bole Medhanialem area in Addis Ababa and Bahir Dar have appreciated by 90 million Br in current market evaluation.
The liquidity ratio, the ratio between the liquid assets and the liabilities of the company, indicate improvements in value and in relative terms. Its cash and cash equivalents has doubled to 41.47 million Br.
Abdulmenan points out United is operating under tight liquidity.
“We have been investing our resources,” Meseret told Fortune.
“As the shareholders are going to increase the capital and more production opportunities are in the pipeline, we will solve the issue of tight liquidity," she added.
The achievement was not without challenges, according to Girma Wake, former CEO of Ethiopian Airlines and the current board chairperson of United, who mentioned that stiff price competition was the major challenge for the insurance industry.
“Our company is drawn to join the cut throat competition on the ground,” he remarked in the annual report. “The insurers are supposed to come together to find common ground and lessen the burden.”
There are 17 insurance firms in Ethiopia with total capital of 5.4 billion Br. Three-fourths of this capital is under private insurers.
United’s shareholders have agreed to double the capital to half a billion Birr. Last year, the capital and non-distributable reserves reached 401.95 million Br.
PUBLISHED ON Dec 10,2018 [ VOL 19 , NO 972]
Fortune News | Feb 23,2019
View From Arada | Jan 31,2021
Radar | Apr 30,2021
Fortune News | Nov 21,2018
July 2 , 2022 . By RUTH TAYE
On a rainy afternoon last week, a coffee processing facility in the capital's Akaki-Qality District was abuzz with activ...
November 27 , 2021
Against my will, I have witnessed the most terrible defeat of reason and the most sa...
November 13 , 2021
Plans and reality do not always gel. They rarely do in a fast-moving world. Every act...
October 16 , 2021 . By HAWI DADHI
Residing in a country with no capital market, an organised marketplace for trading se...
Leaders of the National Election Board are in a charm offensive mood, of a sort. Last week, they organised a rare tour for members of the me...
When the country’s most senior diplomats and envoys return back to their posts after two-week debriefings, they leave behind a point or tw...
August 6 , 2022
Few initiatives by the administration of Prime Minister Abiy Ahmed (PhD) have been pu...
July 30 , 2022
Ethiopia’s banking industry is not merely underdeveloped. It has historically regre...
July 23 , 2022
The flip side of a government spending plan is financing. Behind the campaign promise...
July 17 , 2022
Messrs Ahmed Shide and Eyob Tekalegn (PhD), minister and state minister for Finance,...
PM Abiy Ahmed (PhD) at a Gala Dinner Called for the Awarding of the Félix Houphouët-Boigny Peace Prize
May 6 , 2019
As the rainy season gets wetter, accompanied by heavier rain showers, it is not unusual to see folks with umbrellas. Little do they know tha...
Or see contact page