Lion Insurance, which reported unsatisfactory performance for the past two years, made a notable achievement during the last fiscal year.

The firm’s after-tax profit soared by 112pc to 32.4 million Br, pushing up earnings per share (EPS) by four Birr to 9.4 Br.

Lion’s financial performance was impressive, according to Abdulmenan Mohammed, a financial statement analyst with over 15 years of experience in Ethiopia and the United Kingdom.

“The shareholders of Lion must be delighted to enjoy such massive growth in EPS after half a decade of decline,” said Abdulmenan.

Gebru Meshesha, the chairperson of Lion’s board of directors, also remarked that the company had made commendable achievements in terms of volume, net worth and compliance aspects.

“Despite volatile security and market challenges encountered during the year and beyond,” said Gebru, “remarkable accomplishments have been observed in various strategic areas that are believed to lay a firm foundation to sustain our company.”

The insurance industry nationwide earned 1.3 billion Br in net profit in the last fiscal year from 8.6 billion Br generated from insurance underwriting.

Reduction in claims and increased commission and interest income in investments played major factors in profit growth.

Claims paid out by Lion dropped by 11pc to 89.9 million Br, contributing to the improvement of after-tax profit.

Addressing weaknesses in claims handling has helped the firm to reduce losses, according to Negasi Yoseph (PhD), the Chief Executive Officer of Lion. The insurer was established in 2007 by 300 shareholders with paid-up capital of 16 million Br and subscribed capital of 66.4 million.

“We have minimised extra expenses incurred by garage fees, spare parts and claims administration,” Negasi told Fortune. “We have also used premium loading on high-risk clients and products.”

Lion has managed to reduce claims, while most other insurance firms faced soaring claims in the last fiscal year. In the reporting period, the 17 private insurance companies paid out 3.5 billion Br in claims.

“If claims continue to be well-controlled, improvement in profit is inevitable in the years to come,” commented Abdulmenan.

Commissions earned from reinsurers increased by eight percent and reached 20.1 million Br. Income from investment activities increased considerably with interest income rising by 35pc to 13.7 million Br and dividend income registering a modest increase of five percent to 4.4 million Br.

Even though the firm’s profit has increased significantly, Lion's gross written premium recorded a 5.7pc increase to 350.9 million Br.

“This is disappointing,” said Abdulmenan. “The management should work hard to increase gross written premium at least in line with the market growth rate.”

Out of the total gross written premium, Lion ceded 26pc to reinsurers, leading to a decrease in its retention rate by three percentage points to 74pc.

“Lion's retention rate is lower than that of many insurance companies,” observed Abdulmenan.