Nyala Insurance registered a net profit of birr 141.3 million this year, putting it at the top of the private insurance sector in Ethiopia. This is in keeping of its last year's record, at the end of which it scored a net profit less than 22 per cent of its profit this year. Nyala's closest contender, Awash Insurance, stood at birr 128.7 last year. Shareholder return is also highest in the private insurance sector.
Yared Mola, Nyala's CEO, said, "We have ventured toward high-risk engineering insurance services [which ]has helped push up our gross premiums.” The company's gross premium reached birr 769.3 million this year, a drastic increase of 76.5 per cent, 69 per cent of which goes to international reinsurers including Munich-Re, Swiss-Re and Africa-Re.
Main causes for profit improvements have been mentioned to be an increase in gross written premiums, commission income, controls on claims, and earnings from investment activities. The chairperson, Kemal Mohammed, also pointed out insurance coverage for mega projects as a significant factor in improving the company's financial performance. All-risk and third-party-liability insurance for Koysha Hydroelectric Dam is one of the mega projects Nyala insures for birr 72 billion in insurance risk. Nyala also did well in controlling the claim growth rate, as claims rose only by 1.7 per cent to birr 163.5.
Nyala's surge in net profit, needless to say, came with a matching rise in expenses. Its operating expenses alone rose to birr 126 million, a 22.5 percent increases. This is due to salary increment, commission payments to agents and brokers, branch expansion and efforts needed for the adoption of the IFRS (International Financial Reporting Standards), says the CEO.
The CEO adds, Nyala Insurance is also planning to launch new products that require substantial financial investments; he says they are waiting for their proposal to be approved by the national bank, then they will allocate the necessary resources to the projects.
Nyala's capital has rose to birr 416 million from the previous birr 340.4 million, by 31.8 per cent, as shareholders decided for its raise this year.
Sources: Nyala Insurance Website, Addis Fortune
