Ethiopian Private Insurers Report Profits
In a remarkable fiscal year, four Ethiopian private insurance companies have collectively reported significant profits, marking a robust period for the insurance sector in the nation.
Riley Harper
- 2023-12-28
- Updated 02:54 AM ET
(NewsNibs) - During various general assembly meetings held on different dates, Nyala, Abay, Africa, and Lucy Insurance revealed they amassed a cumulative gross income of 2.95 billion Ethiopian Birr for the fiscal year 2015. Nyala Insurance led the pack with an impressive after-tax profit of 92.4 million Birr, a substantial 76% increase from the previous year's 52.4 million Birr. This was complemented by a total gross income of 924 million Birr, marking a 58% rise from 585 million Birr in 2014 and surpassing their planned gross income by 32%.
Motor Insurance Driving Profits
Nyala Insurance's earnings were heavily bolstered by its motor insurance sector, which contributed to 73% of the gross written premiums for the year. However, it wasn’t all smooth sailing - the insurer faced challenges in other areas, specifically marine, aviation, and transit (MAT) insurance, and workmen's compensation. Factors such as foreign exchange shortages, a declining construction sector, and an import-export trade imbalance were cited as reasons for the underperformance in these categories. Despite these setbacks, Nyala Insurance exhibited a robust claims payout structure, with 856.4 million Birr spent on claims, of which vehicle insurance claims constituted 71%, manifesting the company's significant exposure to the automotive sector. Meanwhile, Abay Insurance reported an exuberant increase in profit of 72.6% from the previous year, supported by over 32,000 different types of coverage policies amounting to a coverage total of 399.5 billion Birr.
Africa and Lucy Insurance Show Strength
Africa Insurance also had a standout year with a stellar increase from a mere 7.9 million Birr after-tax profit in 2014 to 44.17 million Birr in 2015. Even in the face of adversity including war and the inability of customers to make timely insurance payments, the company managed to avert a deficit that had amounted to 2.8 million Birr in 2011. The leap in profit margins for Africa Insurance suggests potential for a healthier dividend payout, escalating from a single share dividend of 32 Birr in 2014 to 160 Birr in 2015. Lucy Insurance wasn't far behind in marking fiscal success, reporting a commendable after-tax profit of 45.8 million Birr for 2015; a 17% improvement over the 39 million Birr gain in 2014.
A Prosperous Outlook Ahead
The reported financial results by the four insurers reflect a prosperous phase for Ethiopia's private insurance sector, signaling not just profitability but also resilience in the face of economic impediments. With collective efforts exceeding ambitious projections and significant growth in gross written premiums, the sector stands as an example of the burgeoning economic landscape within the country. Nyala Insurance's strength in vehicle insurance and the general premium income growth observed in companies like Abay and Africa Insurance serve as indicators of potential and growth in the Ethiopian market. As these companies continue to build their assets and capital, they are poised to play increasingly influential roles in the stability and development of Ethiopia’s financial services industry.
