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The Ethiopian Insurance Corporation (EIC), a state-owned financial firm, provided insurance coverage worth one trillion birr in the 2012/13 fiscal year.
The oldest insurance firm in the country increased coverage by over 113 percent when compared with the coverage of the previous fiscal year. EIC was established in 1976 after the nationalisation of 13 private insurance firms by the Derg regime and has collected a 2.2 billion birr premium starting from the stated period, and from the total premium, two billion birr was collected from general insurance.
According to the EIC report, premium collection has increased from projections by 39 million birr, and when compared with the achievement of the 2011/12 fiscal year, the performance exceeded by 32 percent.
The total premium earned from private companies and individuals, public enterprises and government offices, and other financial institutions is 53.6%, 30.1% and 16.3%, respectively.
During the general assembly held on Friday, Yewondwossen Itefa, CEO of EIC, reported that the insurance firm earned 343.4 million birr in profits before tax.
“The profit registered is about 13 percent higher when compared with the projection and 31 percent higher from the 2011/12 fiscal year,” he explained.
From the total profit, EIC earned 92.4 million birr from bank deposit interest, renting of space and from other sources, but earnings were less by 25.6 million birr when compared with the set target, but has shown an increment of 14.4 million birr from the 2011/12 fiscal year.
The insurance firm’s market share has grown to 46 percent from 41 percent a year ago. In the stated fiscal year, EIC has settled 632 million birr in insurance claims, which is 20.5 percent lower than projected, but is 33.4 percent higher when compared with the previous (2011/12) fiscal year.
EIC holds shares in African Import and Export Bank, African Reinsurance Corporation, Motor Engineering Company of Ethiopia (MoENCO) and Universal Investors Share Company, and it also participates in the co-financing of different projects in collaboration with other banks.
Since the down fall of the Derg regime, private insurance companies were re-established and have again joined the market, but their market contribution is very small compared with EIC. Currently, the insurance firm is preparing to design and build a 30 storey multipurpose complex that will be constructed in front of Ambassador Cinema.
In a related development, the Public Financial Institutions Agency which governs state-owned financial institutions, has announced that the four state-owned institutions, Commercial Bank of Ethiopia (CBE), Development Bank of Ethiopia (DBE), Construction and Business Bank (CBB) and EIC have in total earned 9.52 billion birr in the 2012/13 fiscal year.
The profit shows that 85 percent of the target has been met, according to Dr. Sintayehu Woldemichael, Director of the Agency. Based on the projections, the financial institutions were expected to earn 11.21 billion birr. Employees’ salary adjustment and hikes in administration costs were the main reasons cited for the decrease in performance. According to reliable sources, the three financial institutions, excluding CBB, have adjusted their employees’ salaries by upto 105 percent as of the beginning of the current budget year. The minimum salary adjustment made was 85 percent, according to these sources. CBB is also expected to make similar adjustments, but it needs to obtain the approval of the Agency. The biggest bank in the country, CBE has amassed 8.4 billion birr in profits and DBE has also earned 491 million birr. The total asset of the three banks and the insurance firm has reached 240 billion birr, which has shown 21.4 percent growth when compared with the 2011/12 fiscal year.