Paid 1,096 birr per share
The National Insurance Company of Ethiopia (NICE) has registered an increase in profit four fold higher after two decades in operation. Profits per share have reached over 100 percent in the same period.
The insurance firm, which is the first private insurance company since the downfall of the Derg Regime, has secured 25.2 million birr profit before taxes, for the 2011/12 fiscal year.
Teodros Bogale, Deputy General Manager of Corporate Affairs at NICE, told Capital that the company’s profits before taxes have not exceeded 5 million birr in the last years.
“The risk management strategy that applied to motor insurance is one of the major measures taken by NICE to register significant profits in the last fiscal year,” Teodros explained.
According to the financial report of NICE, the company’s net profit after taxes is 17.9 million birr. The firm has also distributed 1,096 per share that have a value of 1,000 birr. Such high profit margin is unusual in the insurance industry in this country, say NICE’s management.
The insurance report also indicates that the company has taken consistent administrative action in the area of better risk selection, revision of premium rates made regularly based on objective conditions on the ground.
In the 2011/12 financial year, NICE registered outstanding results compared to prior years’ of operation. The gross written premiumet of cancellations and returns amounted to 127 million birr against 78 million birr in the preceding year. “The achievement was higher than the projected amount of 110 million birr,” NICE financial statement indicated.
Officials at the insurance firm explained that the success is due to aggressive marketing and administrative measures taken to streamline operations and provide efficient customer service.
The insurance performance report indicated that the enforcement of third party mandatory Motor Insurance Law has played a huge role in the success of NICE.
Motor insurance portfolio, including third party motor premium, contributed about 66.5 percent (84.5 million birr) to the gross revenue of 127 million birr registered, while the share of motor claims cost was at about 30 percent on gross basis, and 41 percent on net account.
According to the report, the overall ratio of net incurred claims to net written premium stood at 42.6 percent against 60.5 percent in the preceding year that representing 45.4 million birr against 37.3 million birr respectively.
NICE was established in 1994 with 21 individuals and two companies with a registered 20 million birr paid up capital as of the conclusion period.In this fiscal year NICE plans to start the construction of its head quarters around Teodros Square, where it secured an1800 square meter of plot from the city administration a few years ago. Currently the insurance firm has 19 branches and seven contact offices, including the newly opened Atse Zerayacob branch, in Debre Birhan, 130 km northeast of Addis. The company has plans to add one more branch and contact office in this fiscal year.