Nile Insurance S.C. has posted a record 560.5 million birr in pre-tax profit for the 2024/25 fiscal year, marking a 16.6 percent increase from 480.6 million birr the previous year. The insurer credits its growth to a balanced strategy of strengthening core general insurance services and expanding investment income, even as rising costs and shrinking margins pressured the bottom line.
According to the company’s annual report, Nile’s performance remained resilient despite inflationary pressures, fierce price competition, and declining returns from its life insurance division. Earnings per share (EPS) dropped 5 percent to 417 birr, down from 439 birr last year, largely due to higher operational and administrative expenses.
“The year was one of strong financial performance but also of significant challenges,” the company said in a statement. “Costs from office rent, fuel, maintenance, and financing charges have eroded profitability margins.”
Nile’s life insurance segment was highlighted as the most vulnerable business line, with revenue falling to 74.4 million birr from 83.6 million birr a year earlier. The division’s result swung from a profit of 8.9 million birr to a loss of 14.3 million birr, reflecting service costs rising faster than premiums collected.
Overall, total insurance revenue remained steady at 1.15 billion birr, but the company reported that “intense price undercutting and convergence of interest rates” across the industry weakened profit margins.
To cushion the effects of market pressure, Nile increased its focus on investment and wealth management. Board Chairperson Mehari Alemayehu said net profits from general insurance rose 72.2 percent to 408.9 million birr, driven primarily by a 46.7 percent increase in investment income, which reached 333.7 million birr.
Nile’s total assets surged 41 percent to 5.8 billion birr, fueled by portfolio expansion and rising investment in fixed assets such as buildings and equipment. Paid-up capital also climbed 25 percent to 1.25 billion birr, following a shareholder-approved plan to reinvest a portion of dividends to meet the company’s 1.5 billion birr capital target by the end of 2024.
After legal reserves and other deductions, the company’s net profit stood at 475 million birr, and the board has proposed distributing 372 million birr in dividends to shareholders.
Nile’s Shariah-compliant Takaful division continued to show rapid growth, with contributions collected jumping 102.6 percent to 38 million birr. However, expenses in the same segment increased by over 200 percent to 30.9 million birr, reflecting the higher cost of expansion and service delivery.
The company report cited intense market competition as one of the most pressing challenges. Some insurers, it said, were engaging in “undue price undercutting” — offering additional coverage at no extra cost — and certain brokers extended policy terms beyond standard practices.
“These actions have distorted fair competition and weakened pricing integrity in the market,” the company said.
Moreover, macroeconomic constraints have reduced demand for insurance tied to bank loans. The recent 24 percent lending cap imposed on commercial banks has reduced credit activity, thereby shrinking demand for loan-based insurance products. The introduction of Value Added Tax (VAT) on some services has also prompted some customers to drop coverage due to affordability issues.
Despite these headwinds, Nile Insurance said it remains focused on long-term growth through digital transformation, reinsurance consolidation, and improved cost management. The company announced new initiatives to expand customer reach, strengthen branch networks, and refine pricing strategies.
“Our shareholders have shown strong confidence by reinvesting dividends,” the statement continued. “This capital will reinforce resilience and position the company to compete effectively as the market evolves.”
Nile Insurance, one of Ethiopia’s oldest private insurers, said it expects the coming year to remain challenging but expressed optimism that its diversified investment strategy and strengthened capital base will sustain profitability and shareholder returns.
