The profit of National Insurance Company (NICE), the country's first private insurance firm, stagnated in the last fiscal year, registering only a single percent increase.

During the fiscal year, the company's profit grew to 41.9 million Br. Its earnings per share (EPS) decreased by 54 Br to 443 Br due to stagnating profit and a rise in paid-up capital. Despite the decline, NICE's EPS is still reasonable.

Many factors contributed to the insurance firm's stagnant performance. Modest growth in underwriting surplus and interest income coupled with a modest increase in claims, as well as soaring salaries and administration expenses, were among the causes.

Tesfaye Debella, CEO of the company, identified cutthroat competition, the high price of spare parts and escalating house rent as among the challenges facing the industry.

In the reported year, the gross written premium of NICE increased by nine percent to 279.9 million Br. Out of this, 91.3pc was retained, the same as the preceding fiscal year. Over the past three years, NICE has reported a high retention rate, which is far above private insurers' average of 79pc.

Out of the total written gross premium, the lion's share, 46pc, went to motor policy accounting. General accident, marine, fire and bond policies constituted the remaining share.

NICE earned 5.8 million Br in commission from reinsurers, 49pc higher than the preceding fiscal year. The commission NICE paid to agents also increased by 14pc to 15.7 million Br.

Even though the written premium grew, claims paid and provided for increased only slightly by five percent to 144.9 million Br.

“This shows that claims were well controlled,” concluded Abdulmenan Mohammed, a financial analyst with close to two decades of experience. "The practice should be maintained."

The investment activities of NICE showed modest growth in the last fiscal year. Interest income increased by five percent to 25.3 million Br, and dividend income went up by 14pc to 10.6 million Br.

An income spike accompanied the surge in expenses. NICE’s operating cost increased considerably. Salaries and benefits went up by 22pc to 45.3 million Br, and other operating expenses increased by 25pc to 36.5 million Br.

Rising salaries, advertisement and utility expenses caused the spike in operation expenses, according to the CEO.