United Insurance Posts Record Profits

No premium, no cover’ law proves an ally for profit boost, insurance company says.

By Binyam Alemayehu

Addis Ababa, Ethiopia – A central bank directive has helped United Insurance SC make 59.87 million Br profit after tax in 2012/13, a staggering 65pc boost over its 2011/12 performance.

The results, announced during the company’s general assembly on Thursday, October 24, 2013, at the Hilton Hotel, show an overall successful year for the company. In addition to its profit, the company has continued to record healthy liquidity, with its cash and cash equivalents representing 63.26pc of its total assets, a slight increase from the previous year’s 61.53pc.

The introduction of the no-premium-no-cover directive that bans the sale of insurance policy on credit, except to state-owned institutions, has played a part in this year’s success, according to Meseret Bezabih, Managing Director and CEO of United.

“That directive has positive effect on our liquidity,” she told Fortune. “Our success is more attributable to the external environment than to any different operation on our part. We take delight in the result.”

The good news continues for United with its underwriting surplus – the difference between net premiums earned and claims incurred – rising by 52pc to 80.1 million Br, due to improvements in claims incurred, as recorded in the decline of the net claims to net premiums earned ratio to 48.84pc from the previous year’s 56.43pc.

“This improvement is commendable and it indicates that there is huge possibility for further reduction in claims expenses by instituting good risk management,” states Abdulmena Mohammed Hamza, an accounts manager for Portobello Group Ltd – a London-based holding company with subsidiaries in property investment and development. Read more