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.