Nib Insurance Shines without Doubt

Dear editors,

We have read the story headlined, “Nib Insurance Makes Profit, Leaves Doubt” [Volume 15, Number 759, November 19, 2014]. And we have found the news article to be full of negatively charged statements and wrong premises that brought about wrong conclusions.

We believe that it communicates distorted information about our company, contrary to the objective realities – facts and figures – regarding the commendable performance of our company.

Contrary to your headline, the continuation of making profit should not be a surprise. Besides, as already declared in the opinion of the external auditor, TMS Plus Chartered Certified Accountants & Authorized Auditors, “the financial statements, together with the notes forming part thereof, present fairly, in all material aspects, the financial position of Nib Insurance Company (S.C.).”

In an industry where the regulatory body closely monitors the performance of insurance firms in the market, in the best interest of the public, there is no ground for Nib Insurance Company (S.Co.) to declare a wrong and contestable profit.

The industry’s total average retention ratio for the reporting period under consideration is 74pc. From the total gross written premium income of 352.2 million Br obtained in the 2013/14 budget year – from both life and non-life businesses – the amount ceded is only 67.57 million Br, which is 19.8pc of the total and this is less than the 26pc industry average.

Therefore, the statement “Nib Insurance Company gives away half of the premium to reinsurers” is wrong.

As of June 30, 2014, Nib Insurance Company has a paid-up capital of 130.3 million Br. This is by far greater than the capital requirement stated in the recently issued directive of the National Bank Ethiopia (NBE). Nib Insurance Company’s paid-up capital is by far greater than the paid-up capitals which you declared for other insurance firms your newspaper reported on in the same edition.

In fact, our company’s paid-up capital is by far greater than the paid-up capital of the remaining insurance companies operating in the industry. Hence, Nib Insurance Company (S.Co.) being the first in its paid-up capital from all private insurance companies in the industry, there is no ground for a story to state that, “Nib Insurance Company is still undercapitalised in comparison to other insurance companies.”

The percentage of capital and reserves to total asset is not 19.07pc as stated in the story; rather it is 32.63pc.

You claimed the data used in the table illustrated in the story was obtained from our annual report. However, what you have reported as current asset and current liability are actually total asset and total liability, respectively.

Given the fact that 66pc of the company’s income is generated from the operational results of its insurance business, it is not proper to conclude that “the performance in regard to the insurance business is not satisfactory”. However, respecting this point of view, we would like to say that it is important to see the international practice to learn the essence of the insurance business and its source of profit before concluding relying on investment income is wrong.

Last but not least, we would like to mention that Nib Insurance Company has no intention of giving misleading information to the public. It is always ready to work with credible media to give the relevant information to its stakeholders and the public at large.

Nib Insurance Company S.Co.






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