Bunna Insurance still strong despite slip in profit

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Bunna insurance has shown a performance decline contrary to the past seven years.
During 2019/20 budget year bottom line result of the company shows a profit of Birr 20.05 million which is only 68% of the planned Birr 29.62 million and it is 28.21% below last year profit of Birr 27.92 million. This under target profit is registered mainly because of under target underwriting result achievement and high interest expense paid because of interest paid for loan taken to acquire head quarter building.
However surplus and profit shows continuous growth for four consecutive years from 2015/16 to 2018/19 and decreases on 2019/20 budget year.
During the budget year the Company has underwritten a Gross Written Premium (GWP) of Birr 249.35 million which is 8% above the targeted Birr 230.52 million GWP and it shows 22% growth from last year 204.08 million birr.
While looking at our twelve months performance in terms of classes of businesses, over target achievement is registered on Political Violence and Terrorism (PVT), Liability, fire and Lightning, Engineering, Marine and Motor classes of businesses by performing 131%, 36%, 21%, 14%, 11%, and 3% over the target, respectively. On the other hand under target achievement is registered by Pecuniary, W/C, GPA and Travel classes of businesses by performing 6%, 16%, 22% and 27% below the target respectively due to slow economic performance, travel restriction due to Covid-19, failure of clients to renew their policies, etc.
While looking at Portfolio mix of annual production, motor class of business takes the lion share with 56.31% contribution followed by Liability (11.34%) and Pecuniary (9.48%). The remaining classes of business together contribute 22.87% of the Annual production.
During 2019/20 budget year the Company has paid a gross of Birr 127.64 million claims which is 7% over the planned Birr 119.42 million claims payment. As at June 30, 2020, outstanding claims of the company reached Birr 90.93 million which is 73% over the planned Birr 57.76 million outstanding claims. At the end of the budgeted year, actual gross claim incurred was Birr 142.83 million which is 8% over the planned incurred claim of Birr 131.70 million.
The company has utilized 100% of its budget held for general and administration expense during 2019/20 budget year. Total incurred expense is Birr 65.72 million while the budget is Birr 65.61 million.
Underwriting surplus of Birr 27.85 million is registered during 2019/20 budgeted year which is only 66% of the targeted Birr 41.83 million surpluses.
During 2019/20 budget year, Birr 34.48 million has been collected as other Income which is 22% over the planned Birr 28.30 million. Main sources of other income are Interest income on time deposit and government bond, interest on saving deposit, dividend income, rent income, and other miscellaneous incomes.
However, for emphasis, surplus and profit shows continuous growth for four consecutive years from 2015/16 to 2018/19 and decreases on 2019/20 budget year.
As at June 30, 2020 total assets and total liability of the Company reached to Birr 562.72 million and Birr 393.21 million, respectively. Total liability of the company primarily includes outstanding claims, provision for unearned premium, payables due to re-insurers, reserves for unexpired risk and other Technical Reserves.
The company’s paid up capital has increased to Birr 145.14 million as at June 30, 2020 from last year’s paid up capital of Birr 112.61 million. The company has in-vested additional short term investment of Birr 63.3 million on time deposit and investment on share of Birr 32.53 million during the budget year which makes total time deposit balance of the company Birr 167 million and total investment on share of Birr 94.90 million.
The company as per plan has opened three branches One in Addis Ababa [Aratkilo] and Two in regional cities of Jimma and Debirebirhan- which brings the total branch network of the company to twenty four and two contact offices.