By our staff reporter

The United Insurance Company (UNIC), one of the first insurers to enter the market when the private sector was allowed to reengage, generates more than one billion birr in premiums.  The firm’s great stride was also anchored by increased capital and in contrast to what was anticipated, earnings per share also increased dramatically.

The chairperson of the insurance company board of directors, Wondwossen Teshome, said during the company’s 29th general assembly on Thursday, November 9, that UNIC had achieved significant milestones in the fiscal year that ended on June 30, 2023.

According to him, the firm has identified this year as an exceptional one since it paved way for earnings to a premium of more than one billion birr during the fiscal year. According to the annual report, the insurance company’s gross written premium (GWP) for both life and general insurance operations increased by 58 percent to reach 1.5 billion birr from 953 million birr, the previous year.

According to the annual report, the GWP for general or nonlife insurance alone surpassed one billion birr, rising from 860 million birr to 1.35 billion birr. The premium rate increase on vehicle insurance beginning in November 2022 was noted as the primary driver of the 57 percent rise in the general insurance GWP.

In the reporting year, nearly every business class experienced growth; however, the motor class had a 77 percent increase in comparison to the previous year. Similar to this, UNIC’s life insurance business has shown impressive growth on GWP. The life business has grown by 65 percent in the closed year, reaching 154 million birr.

The net claims for both insurance businesses have now increased by 33 percent in the reported year, that is, from 349 million birr to 463.5 million birr. “The corporate loss ratio, however, has dropped dramatically to 47 percent from 61 percent in the 2021/22 fiscal year. Additionally, it is less than the industry average of 59 percent for the fiscal year 2022/2023,” the annual report stated.

In comparison to the same time last year, the total underwriting profit from the generals and life insurance businesses increased by 75 percent to 433.4 million birr. According to the report, UNIC’s earnings before tax increased from 206.5 million birr to 391 million birr, an 89 percent increase. Likewise, the profit after tax increased from 181.5 million birr to 327 million birr, an 80 percent increase.

The insurance firm has obtained a rise in earnings per share, which is extraordinary considering that it grew its paid up capital to 840.6 million birr during the reporting period, a 68 percent increase. According to industry analysts, a capital increase typically results in a decrease in earnings per share. “Generally, a company’s earnings per share for the upcoming year is expected to show a reduction when it boosts its capital that expand the share base, but our performance has registered extraordinary success regarding this,” Meseret Bezabih, CEO of UNIC told Capital.

“The primary reason for our success is our effective cost control. We also adopt a prompt approach to claim settlement, which has helped us avoid the market price hikes,” Meseret said. “One of the factors contributing to the year’s notable rise was the increase in vehicle insurance that went into effect in November of last year; these are the main factors that will increase our earnings,” she added.

According to UNIC, its earnings per share have increased by 29.4 percent, in the 2022/2023 fiscal year in contrast to the previous year. According to the audited report, the company’s earnings per share have increased to almost 48 percent from 37 percent in the 2021/22 fiscal year.

The insurance company, which has investment across a number of sectors including shares and buildings, has also increased its investment income. The company’s yearly investment revenue has also climbed by 47 percent to 255.6 million birr in the year under review.

UNIC’s overall asset has increased by 52 percent to about 3.3 billion birr, with nearly 1.5 billion birr representing the whole equity. The firm has 61 branches as of the end of the fiscal year, including seven new ones that opened during the year under review.

The report identifies abnormal competition among industry players as a challenge, noting that the sector regulatory body, the National Bank of Ethiopia, has issued a directive setting a minimum premium rate for motor insurance, which should allay concerns about premium undercutting rather than service quality. The research has included personnel turnover and inflation as other issues facing the industry.

By our staff reporter

The edible oil producers association reveals that, despite its members’ claims of having sufficient capacity to meet local demand at a fair price; it is still waiting on government to take swift action with regards to providing foreign exchange for the speed up of production.

This week, the association wrote another letter pleading with the government to assist the industry, which is severely backtracked by lack of sufficient input.

The Ethiopian Edible Oil Manufacturing Industries Association, an organization that represents edible oil manufacturers, recently contacted the Ministry of Finance (MoF) to request for foreign exchange help for the industry. The interest group stated in a letter that although oil producers are about to run out of input, the government is taking the lead and setting aside millions of dollars to import finished goods.

In a recent letter dated Monday, November 6, the association requested a response from the MoF about the issue, which is similar to a request it had sent not too long ago.

The sector lobby group also mentioned in the letter that its members are unable to import crude oil for their manufacturing due to a lack of foreign cash. The statement read, “However, the Ethiopian Industrial Input Development Enterprise is importing millions of dollars worth of finished products on the issuance letter of credit scheme that is backed by the Commercial Bank of Ethiopia.”

According to the statement, the combined yearly production of six of its members requires over 1.15 million metric tons of crude oil. Fibela Industrials has a manufacturing capability of 300,000 and 285,000 metric tons for Shemu and Hamaressa, respectively, of the declared yearly production requirement.

The letter states that WA Oil Factory, Al Impex Business, Gifti Foods, and Packaging can process 135,000, 114, 816, and 27,375 metric tons of crude oil annually.

The association also noted in the letter it delivered to the MoF earlier this week that domestic edible oil prices would be reduced if foreign exchange was provided in accordance with the indicated production capacity.

“In addition to the drop in retail prices for customers, the foreign exchange charge incurred for raw materials is far less than that of importing finished goods,” the letter further states, “In addition to additional advantages for manufacturers and the economy as a whole, industries would generate more employment if they were running at their full potential.”

Recalling of the allocation for the previous budget year which was under the demand and capacity of the pressers, it stated, “Although we expressed the actual demand of our factories for the budget year, which started on July, the foreign currency is yet to be released.”

Speaking with Capital, oil pressers expressed optimism that the government would respond favorably to their request for foreign exchange to be allocated for the necessary purchase of crude oil and other parts pertinent to their sector. According to Shemu, a pioneer in the business and one of the manufacturers based in Dire Dawa, the industry is now manufacturing food oil at a low capacity.

An executive at the plant stated, “We are accessing foreign currency and raw material in different ways, at least to run the industry and hold employees.”

The official at Shemu explained that most of the foreign currency generated to import the crude oil is coming from the supply of detergent products that the company produces on the lines of its factories and supply to UNHCR.

He explained the issue to Capital, saying, “We are forced to operate at minimal capacity because we are running with very limited foreign currency.”

“We are facing a challenge in the interim, and we are hoping that the government will assist us in increasing our output by providing the necessary foreign currency,” he expounded.

Regarding the continuation of its operation, at least on minimal level, the official at Shemu clarified that the company’s supply of detergent goods, which it manufactures on-site and supplies to UNHCR, accounts for the majority of the foreign exchange earned to import crude oil.

Shemu is renowned for its line of cleaning products, which includes detergents and soaps.

Additionally, he said, “We are engaging to create alternative sources of raw material for sustainable supply, including from farms that we are acquiring.” The firm uses oilseeds as an input from recently acquired farms.

The industry lobby group stated, “Our members are in danger of having to manage their employees and stop production due to a lack of foreign currency allocation.”