Radar | Apr 10,2021
January 26 , 2019
By FASIKA TADESSE ( FORTUNE STAFF WRITER )
Even though gross written premiums showed no significant increase, the decade-old insurance firm Ethio Life & General registered 19pc profit growth in the past fiscal year with the support of investment income.
In the reported period, the firm managed to net 23.61 million Br in profits, which pushed shareholder returns to 235.12 Br a share, an 8.8pc increase from the previous year.
The year was multifaceted, an exciting as well as a challenging year, according to Yoseph Endeshaw, board chairperson of the firm.
“The stiff and unethical competition and a critical shortage of insurance professionals posed challenging conditions in our business undertakings,” said Yoseph, addressing shareholders in the firm’s annual report. "Despite the hurdles, we continued to perform strongly."
Along with a high underwriting surplus, incomes generated from time deposit interest and dividends jumped by 15pc to 17.59 million Br and by 18pc to 1.72 million Br, respectively.
The firm put 143.37 million Br in fixed time deposits and 47.62 million Br invested in shares, bonds and properties.
Underwriting surplus has also risen by 47pc to 50.66 million Br due to a reduction in premiums ceded and claims.
The total gross written premiums, both in life and general insurance, has increased marginally by two percent to 131.9 million Br.
“The increase in gross written premiums is not satisfactory,” commented Abdulemenan Mohammed, a financial statement analyst with vast experience in the financial industry.
Being very selective in issuing insurance coverage has kept the firm from writing huge premiums, according to Shimeles G. Giorgis, the firm's chief executive officer.
"It lowered our market share in the industry," Shimeles told Fortune. "At the same time, it helped us to control claims."
Claims paid by the firm went down by four percent to 49.24 million Br. This is recorded despite the trend in the industry, where claims have been soaring.
Out of total gross written premiums, 36.25 million Br was ceded to reinsurers. The retention rate rose to 72.5pc from 68.8pc.
“There is still room for increasing the retention rate,” Abdulemenan says.
A huge expansion of expenses accompanied the income surge.
Salaries and benefits and general administration expenses went up by 49pc to 23.7 million Br and by 14pc to 17.05 million Br, respectively.
Last year, Ethio Life opened a single branch, which was one of the 40 new branches opened by the 17 insurance companies last year. About 84pc of the total new branches were privately owned.
The total assets held by Ethio Life & General increased by 34pc to 400 million Br.
Total investments of the firm account for 47.7pc of total assets of the company. This proportion is far lower than the preceding year’s ratio of 55.8pc.
This must have been due to a huge amount of money held in receivables, according to Abdulmenan.
"The company should collect this money and put it in income-earning activities," said Abdulmenan.
Liquidity analysis shows that cash and bank balances of Ethio Life decreased in value as well as in relative terms. Cash and bank balances decreased by nine percent to 40.94 million Br.
Cash and bank balances to total assets fell to 10.2pc from 15.1pc.
Despite the reduction, the liquidity level of Ethio Life & General is at a reasonable level, according to Abdulmenan.
The firm's capital and non-distributable reserves account for 24pc of its total assets, demonstrating Ethio Life's strong capital.
However, the capital of the firm has increased by a marginal increase of four percent to 89.92 million Br; while the industry in gross recorded a 26.4pc growth to 5.5 billion Br. Out of this, the share of private insurance companies was 72.1pc.
The insurer had a plan of raising its capital to 200 million Br during its latest general assembly but failed, because it did not have a quorum.
"We have called for an extraordinary meeting to raise our capital," Shimeles said.
PUBLISHED ON Jan 26,2019 [ VOL 19 , NO 978]
Radar | Apr 10,2021
Fortune News | Feb 15,2020
Fortune News | Apr 24,2021
Fortune News | Apr 06,2019
Fortune News | Sep 06,2020
Fortune News | Jul 27,2019
Radar | Jul 27,2019
Radar | Jan 09,2021
Fortune News | May 15,2021
Fortune News | Apr 12,2020
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