Lucy Insurance S.C., the youngest insurer in the Ethiopian economy, declared it made a total of 4.2 Million Birr profit during the last fiscal year.
This figure is a major boost when compared to what the Company’s management declared for the year before, 69,000 Birr.
According to fortune the underwriting surplus, meaning what is left after claims have been paid, grew by 239 percent and reached 8.2 Million Birr. In addition to this, Lucy’s interest income shot to 1.74 Million Birr from 124,000 Birr.
Other figures also seem to be promising. The Insurer collected 42.66 Million Birr gross written premium (GWP) out of which nine million is ceded to reinsurers. According to Fortune, during the entire year the firm ceded 4.47 Million Birr and retained 78.7 percent.
Comparison with the previous year reveals this figure is a lot bigger than 77.7 percent, which was the amount the Firm retained during the previous year. The Newspaper also noted the performance is a lot better when compared to the industry’s average retention rate, 67 percent.
Another impressive figure is the amount the firm paid for claims, 6.7 Million Birr which is 22.4 percent of the net premium earned. This also shows improvement from the year before it which was 37.7 percent and indicates Lucy’s customer checking for risks has improved tremendously, according to Abdulmena Mohammed Hamza, an analyst working as an account manager at the Portobello Group Ltd.
Abdulmena also commented on the firm’s commission rate which is 2.62 Million Birr, 6.14 percent of the gross premiums underwritten. He noted, “The commission rate is higher than at other insurance companies as well as last year’s six per cent”.
Lucy’s total asset also increased by 84 percent and reached 54 Million Birr. Out of this 31 Million Birr is held in interest bearing deposit account. The cash and the bank balances held by the company’s account is 16.35pc of the total asset and Lucy’s liquidity has moved from 1.2 to 1.35.
As to the company’s paid up capital it increased by 93.3 percent reaching 15.53 Million Birr. Nonetheless, this figure is 60 Million Birr short of the 75 Million Birr capital the National Bank of Ethiopia requires Insurers to have by the end of the year 2015.
Lucy’s shareholders have decided to resolve to transfer their Earning per Share (EPS) to recapitalize the firm. “The EPS will not diminish but it might appear that it has diminished as the amount given in the form of dividend will be in the phase of investments; the asset will increase,” Alemseged Abreham, the CEO of Lucy, commented.
Temesgen Dengago, a founding shareholder with 1750 shares, explained the decision by the shareholder to give up their dividends as felicitous. He furthered, “We look for a better future”. “We are also insuring our properties with Lucy.”
In related news, Lucy agreed with Debub Global News to collaborate, after signing a non-binding memorandum of understanding (MoU). Both firms bought 3.75 Million Birr worth of shares from one another.
This will help both companies to speed up their attempts to take on the central bank’s standard,” said Alemseged. “Lucy has 14 months to reach 75 Million Birr and DGB has to reach 500 million Birr.”
Addisu Habba, President of Debub Global Bank, noted his Bank is encouraging clients that take loans to go to Lucy, for their insurance needs. “This will give us mutual benefits,” he explained.
It was back in November 2012 Lucy was established between 39 founding shareholders.
Source: Fortune
