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NIC stable despite profit decline - MD

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National Insurance Corporation Building in Kampala. FILE PHOTO 

By FARIDAH KULABAKO

Posted  Monday, September 9  2013 at  01:00

In Summary

Ranking. In the 2012 Insurance Regulatory Authority provisional report, NIC was ranked 9th out of 20 firms in the non-life insurance category

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KAMPALA.

Negative publicity that followed the National Insurance Corporation and Makerere University staff pension funds saga has continued to affect the performance of the insurance firm, a top official has said.

Mr Bayo Folayan, the NIC managing director, told journalists after the annual general meeting last week that the after-effects of the “negative publicity” are still reflecting on the company’s financials.’

Despite slight growth in the net written premiums from Shs6.1b to Shs6.6b, according to the 2012 annual audited financial report, the insurer posted a deep fall in its net profits to Shs3.7b as at December 31, 2012, down from Shs12.9b posted in the previous year.

This is hinged on among others, the fall in total income, which halved to Shs12.7b from Shs22.5b due to a drop in fair value gains on investment properties, which reduced to Shs3.95 billion from Shs13b the previous year.
The company has also posted a deceleration in net earned premiums for the third year in a row, falling to Shs6.4b from Shs6.7b the previous year, and Shs8b in 2010.
The company’s total assets also slumped to Shs82b last year, from Shs86b in 2011.

This, according to the managing director Mr Bayo Folayan, was due to some assets which the firm had to sell to settle liabilities in a bid to free the company of the financial burden, thus the fall in assets.

The insurer is said to have sold off some of its money-spinning assets including three apartments with 18 flats and a vacant piece of land in Kansanga, a Kampala suburb in 2011 to raise funds to settle the debt it owed Makerere University Academic Staff Association (Muasa), accruing from the pension savings it managed between 1996 and 2005.

Instabilities in the foreign exchange market also affected the company, increasing its foreign exchange losses to Shs129m from Shs16m the year before.

The firm pays reinsurance premiums in foreign currency, in addition to settlement of some claim and dividend payment to some shareholders.

fkulabako@ug.nationmedia.com