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Nyala Insurance S.C (NISCO) has undertaken the preliminary ground work to begin a re-insurance company. This type of company buys high risk policies from other insurance companies to manage risk. The re-insurer promises to cover the potential losses of the primary insurance company. In this way the re-insurer acts as an insurance company for the primary insurance firm receiving premiums from it. The primary insurance firm collects its premiums from the policyholders. This transfers risk from the insurer to the re-insurer. Eyob Meherette CEO of Nyala Insurance S.C told Capital that his company is doing the preliminary studies and they will present their finding to their board of directors. “The country is losing lots of foreign currency by buying policies from re-insurers, as some of the business cannot be done by local insurance companies alone,” the CEO said. “Every insurer passes some risk to a re-insurance company as this will reduce the insurer’s exposure to risk of losing a big chunk of money if many accidents happen at once, or if unforeseen circumstances occur,” he added. The National Bank of Ethiopia (NBE) also wants the country to have a reinsurance company because it would save more foreign currency, according to Eyob. However, the NBE does not have regulations or re-insurance companies at this time. The CEO added that it will take some time until the realization of the company that they hope to call Nyala Re. The reinsurer business is dominated by European and US multinational companies. There are a couple of reinsurers in Africa but they are not as dominant because it requires billions of dollars. In related news, Nyala Insurance Sh. Co. also announced that it made 27. 8 million birr net profit last fiscal year, 8.8 million birr higher than their performance in the 2009/10 fiscal year. Their shares increased to 795 birr from 613 birr per share. NISCO, one of the oldest private insurance firms in the country generated 34.2 million birr in profit before taxes in the 2010/11 fiscal year.
According to Eyob the general insurance net premiums of the company grew 19 percent while that of long term insurance collected premiums registered 47 percent growth over the last year. The growth in general insurance premiums resulted in an underwriting surplus of 35.8 million birr an increase of 23 percent. The non-operating income was 16.8 million birr which is a growth of 21 percent from that of last year’s performance. This was generated mainly from the divided income that the company got from its investment in Dashen Bank and interest income which partly resulted from the upward revised saving interest rate and the significant increases of cash in the bank as well as from real estaterental income the company is involved in. According to the insurance’s financial report, the life fund account as of June 30, 2011 accumulated the 28.32 million birr. The total assets of the company increased from 212 million birr to 248 million birr, an increase of 17 percent, while the total liability of the company increased from 119 million to 124 million birr, which is a four percent increment. Nyala plans a headquarter office to be built on Africa Avenue. However, Eyob said that the Addis Ababa City Administration Construction Permit Office repeatedly denied them a authorization to start construction on the plot. The said plot has remained idle for the past 12 years. Nyala Insurance company is the first financial firm that introduced crop and livestock insurance for farmers in the country and is also working to introduce interlinked products’ insurance for farmers.