Oromia Insurance Company S.C (OIC) registered a record net profit of 11.7 million birr in its third year of existence, which is an increase of 447% compared to the 2.1 million birr profit it registered during the last fiscal year.
The fiscal year which ended on June 30, 2012 was a landmark in the short history of the insurance firm.
The company’s report indicated that the high premium income is the result of an enhanced and careful selection of risks, a reduction in trade debtors balances due to an extensive and intensive collection campaign. Investment of temporary idle cash in fixed-time deposits, effective cost saving and an efficient control mechanism and small dividends generated from equity investment all contributed towards this performance, states OIC.
During the 2011/12 year one of the youngest insurance company’s gross written premiums jumped from 84.1 million birr in the preceding year to 156.5 million, which is 86% higher than the previous year’s record.
The total asset of the company as of June 2012 grew to 185.75 million birr from 96.3 million birr from the preceding year, showing a marked growth of close to 93%, while total liability swelled up by 219% from 33.9 million birr in 2010/11 to 74.3 million birr in 2011/12.
In terms of portfolio mix, the motor class business continues to grow and accounts for the lion share; 69% of the gross written premium, followed by marked difference by marine (11%) and pecuniary (10%). While the fire class of business constituted about 4% of the portfolio, other classes of business including micro insurance contributed the balance.
The growth in the motor class business is mainly attributable to the enforcement of compulsory third party motor insurance laws. As compared to the 10.5 million birr surplus of the previous year, the underwriting result for the year was a surplus of 16 million birr showing a growth of 52%.
OIC has micro insurance services that started in December 2009 with the objective of delivering micro insurance products primarily to farmers’ cooperative unions. The company issued a Multi-Peril Crop insurance product in 2010/11 fiscal year to a number of farmers’ unions in various places.
OIC is the first and only insurer that introduced insurance products suitable to the needs and pockets of pastoralists, known to be Index Based Livestock Insurance (IBLI). The IBLI has been launched in the Borena Zone of the Oromia Region, which is the second of its kind in the world, next to the northern Kenyan Marsabit project where IBLI was first tested.