Tsehay Insurance, one of the youngest insurers, has reported a positive performance for the third year in a row due to robust income growth.

During the last fiscal year, the firm’s after-tax profit rose by 26pc to 29.5 million Br, leading its earnings per share (EPS) to register a two Birr increase to 37 Br.

The management of Tsehay should take credit for the impressive performance, according to Abdulmenan Mohammed, a financial statement analyst.

The success of the company came despite challenges it faced, according to Mandefro Erkou, board chairperson of the insurer that was established in 2012 and currently has 19 branches, representing 3.5pc of 532 branches held by the insurance industry.

“Despite the growing bargaining power of customers, national political unrest that engulfed the nation and economic instability, the firm managed to achieve an encouraging performance,” said Mandefro.

The positive performance of the firm is driven by expansion in all income items. Underwriting surplus increased by 16pc to 25.6 million Br due to an increase in written premiums that reached 285.7 million Br.

Tsehay managed to retain 79.2pc of the premiums, nearly a percentage point increase from the previous fiscal year.

“The level of retention at Tsehay is reasonable,” said Abdulmenan.

There was an increase in claims and other technical provisions against Tsehay where the firm paid out 146.2 million Br, increasing almost by half from the preceding year.

This demonstrates Tsehay underwrote insurance policies for high-risk clients, according to Abdulmenan. “The management of Tsehay should have a system that screens high-risk clients,” he said.

The business environment in the country has led the firm to have high-risk clients, according to Kassa Lisanework, CEO of Tsehay.

“Due to the business slowdown in the country, there was no business coming from non-motor businesses, and even those non-motor businesses we insured had low premium rates,” said Kassa.

In the last fiscal year, 70pc of the insurance portfolio of the firm was motor insurance, according to the CEO.

"As the price of spare parts has increased, our expenses on motor claims have soared," Kassa told Fortune.

Commissions paid to agents have increased to 20.8 million Br, up by 28pc, slightly higher growth than the written premium growth rate.

Tsehay did well in its investment activities. Interest and dividend income soared by 45pc to 26.9 million Br due to increased investments in interest-earning deposits.