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Raya Brewery share sale brings huge profit to United Insurance

The share transfer of Raya Brewery has increased the earnings of one of the most profitable private insurers, The United Insurance Company (UNIC), by 95 percent.
The 24th ordinary and 11th extra ordinary general meeting of UNIC, which is one of the oldest private insurance firms since the free market was reintroduced in the early 1990s, has also decided to double the capital from the current quarter billion to half a billion birr.
According to Girma Wake, chair of board of directors, the insurance sector has contributed a 26 percent increase in terms of profit. He said that for the significant profit growth is pushed by the capital gain from the share transfer of Raya Brewery which is fully controlled by BGI International, who was one of the major shareholders of the youngest brewery. BGI owned 42 percent of the total shares at that time. They offered seven times the amount per share to buy the balance of 58 percent of the shares of the brewery located in Maichew, Tigrai.
In the 2017/18 financial year the insurer registered gross written premiums of 474 million, an increase from 417 million in 2016/18, while the gross earned premiums stood at 449.5 million which is a 65 million birr increase compared with the preceding year’s performance. From the total 474 written premiums the life section has the highest portion at 36 million birr.
The premium earning has increased by 13 and 20 percent in the general and life sector respectively. The report from board of directors indicated that the premium increase at UNIC is slightly different compared with the average 11 percent growth in the industry.
The loss ratio also declined, which is unique compared to the trend in the country. For the year the loss ratio stood at 67.9 percent which was 70.5 percent a year ago. The annual report of UNIC indicated that the net underwriting income has increased to 391 million birr as opposed to 319 million a year ago.
At the same time the net income has reached 237 million birr from 150 million in the 2016/17 fiscal year. The report indicated that the profit before tax for the 2017/18 fiscal year reached 132 million birr which is an unusual increase compared with the sector trend. A year ago the company earned a profit before tax of 67.8 million birr. The past year’s performance is a significant growth and an increase of 95 percent.
The board chair report indicated that the insurance firm, which also controlled significant shares at Raya, has earned close to 54 million birr from the share sale. For the year the gross profit after tax stood at 125 million birr that which is an increase of over 100 percent. In the 2016/17 fiscal year the profit after tax was only close to 60 million birr. The earnings per share increased significantly during the year. According to the report the earnings per share was 504.5 birr per 1,000 birr share value. The earnings per share increase is over 103 percent compared with the 2016/17 financial year that was 247.8 birr per 1,000 birr share value.
As of the end June 30, 2018 the assets of UNIC reached at 1.33 billion birr which was 1.19 billion a year ago. In his report Girma indicated that the head quarter building that is located at Tewodros Square will be fully finalized in the coming two months and the headquarters will be moved there in the current fiscal year. The general assembly has agreed for the payment of 43 percent of the dividend.
During its extra ordinary meeting the board of directors tabled for the capital increase to 500 million birr that is now 250 million birr. The board of directors indicated that the capital increase is crucial to be one of influential market actors in the industry. The board chairman explained that the company needs to expand its capital in relation to its growth and other projects. “United Bank that UNIC is one of the major shareholders of has decided to boost its capital to 5 billion birr form the current two billion so it should invest proportionally, while the finishing work at the headquarters, building construction at Bahir Dar branch, possessing new recovery site and commence construction in the existing recovery area, and other investments needs significant investment,” Giram explained.
He said that the total investment for this and other projects including settling the subscribed capital at Ethio Re the insurance firm needs 422 million birr. He also added that the insurer should become one of the top insurers. He elaborated that some of peer insurance firms already have a similar amount of capital. “In addition to several benefits the bargaining power of business with reinsurers will also increase if we boost our capital,” he added. The capital will be fully paid within five years by the end of 2023.
During one of the regular sessions of the meeting the new board directors was elected. During the session Samrawit Getamesay, Teguest Yilma, Abera Tasew, Mulualem Berhane, Enat Bank, Amare Gashaw, Akiko Seyoum, Alemayehu Gebree and Birtukan Gebre-egzi won the most votes to lead the Insurance firm for the next term. Of the nine elected directors the first two had the highest vote total respectively, while four of the total board members are women.


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