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The United Insurance Company (UNIC), one of the oldest private insurers, has registered progress in the past financial year. Meanwhile, the insurance industry is battling to record its regular growth performance.
The general assembly of UNIC that took place on Thursday November 2 , 2017 at Sheraton Addis approved the one year performance of the insurance company and elected two new board members.
The report presented by Girma Wake, chairman of the board of directors of UNIC, states that in the 2016/17 financial year the insurance company had registered an underweighting profit of 76 million birr, which was 70.8 million birr in the 2015/16 financial year.
For the 2016/2017 year the insurance firm was able to write 387.2 million birr premium from non life insurance sector with the growth of 23 percent compared with the preceding year. The report shows that the non life premium growth rate is 17 percent indicating UNIC’s growth is above the national trend.
The board head said that the life insurance has also registered ample growth in the 2016/2017 finance year with ten percent growth over the 2015/16 performance, while the industry growth rate is 8 percent.
The life sector was able to register a gross written premium of 29.8 million birr from last year’s 27 million birr.
The report indicates that the claim ration has registered an increment in the past fiscal year compared with the preceding year.
It indicated that the claim ratio went up from 65 percent last year to 70.5 percent in 2016/17. “As compared to the industry’s average of 65 percent (69 percent in the previous year), the company’s loss ratio moved above this line for the first time in the recent past,” the annual report explained.
According to the report the non life loss ratio unfavorably grew in most classes of businesses that excluded the engineering and a group of small premiums.
The motor class loss ratio, which is one of the major challenges for the insurance industry, has grown by 85.7 percent, while it was 75.8 percent a year ago.
The marine cargo and inland transit loss ratio has also registered significant growth compared with the preceding year. The report stated that the loss ratio for marine cargo and inland transit for the 2016/17 financial year has been increased by 30 percent, which was 13 percent a year ago. Fire and general accident loss ratio grew by 18 percent in the stated period.
The motor sector has continued as damaging business for the insurance industry. From the total incurred insurance claims at UNIC the motor sector has taken the lion’s share.
The UNIC report indicated that 92 percent of incurred claim is associated with motor business claiming 174.3 million birr from the total of 189.5 million birr.
The report indicated that in the 2016/17 financial year the gross profit before tax has stood at 70.1 million birr with a decrement from the preceding year. A year ago the insurance company has earned 72.3 million birr gross profit before tax.
However the net profit after tax has registered increment for the 2016/17 financial year that ended June 30, 2017.
The UNIC report indicated that in the stated time frame, the net profit after tax has stood at 61 million birr, which was 60.8 million birr a year ago.
Head of the board of director stated that the profit registered decrement due to the increment in the year’s registered claim. However the sector expert stated that the performance of UNIC is impressive compared with the sector’s circumstances that are struggling to register better performance. Experts added that even though the insurance industry premium earning is growing, the unhealthy competition between insurers affects the sector’s revenue.
From time to time the premium rate has reduced due to stiff competition between insurance companies. The association of insurance companies has already conducted a study to find solution for this problem facing the insurance business. Experts claimed that the insurance sector should, at least have a minimum premium rate, similar to the experience of neighboring countries. If the study gets approval from the financial supervisory body, National Bank of Ethiopia, it will be applicable before the end of the current financial year, according to experts.
On its 23rd general assembly UNIC also disclosed that it will finalize the construction of its head quarter located around Tewodros Square in the mid of the current fiscal year.
On the day, the general assembly also elected two new board members to replace those who concluded their terms. According to the election result, Teguest Yilma and Enat Bank SC have become new board members of UNIC.
As per the decision of the 2015 general assembly, the insurance company has increased the paid up capital to a quarter a billion birr, currently it has reached 245 million. Meseret Bezabih, CEO of UNIC said that the balance will be concluded in the current financial year.