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Votes to raise capital
The Board of Directors of United Insurance Company SC (UNIC), a company that registered tremendous profit in the past fiscal year,
has tabled a proposal to its shareholders to increase the subscribed and paid up capital to 125 million birr during the general assembly held on October 24.
The board, which is chaired by the prominent businessman and founder of UNIC Zafu Eyessuswork Zafu, forwarded the proposal which will come into effect starting from the 15th of November 2013, and will increase the subscribed and paid up capital of the company from the current 100 million birr to 125 million birr by adding 25 million birr from the net profits available for distribution to shareholders plus the total balance of the share premiums appearing on the balance sheet as of June 30, 2013.
The Board stated that the insurance company is now expanding its investments and the growth in capital will enable it to cover the financing needed for two construction projects and its newly acquired building around Bole Medhanialem, the expected exercise of the company’s prerogative to buy additional shares from United Bank’s shares floated on the market (which the Bank had earlier declared it is floating to increase its capital to 1 billion birr), and to invest into a national reinsurer firm in the future. The Board declared that an increase in capital is required to maintain the relatively robust financial strength of the company. According to the Board of Directors, the insurance firm will expand its share at the United Bank by 17.87 million birr.
In addition, UNIC is currently constructing a mixed-use building at Akaki-Kaliti and it is expected to cost 100 million birr, while construction of the new 12-storey UNIC HQ located at the Tewodros Square has commenced and its expected price tag is 250 million birr.
In the meantime, the insurance company has secured the six-storey building next to Edna Mall through an auction, which was floated by United Bank in the current fiscal year. UNIC secured it by paying 94 million birr and other costs such as VAT and the transfer of the title deed raised the total cost for the building to 115 million birr.
The insurance company also plans to invest in the region of 10 to 20 million birr to establish a joint partnership (public-private) national reinsurer firm company when the decision to do so gets the approval of the National Bank of Ethiopia. United Insurance has also decided to double its share at Raya Brewery, raising it to 10 million birr.
In view of these propositions, the general assembly agreed to increase the capital based on the Board’s proposal.
According to the annual report of UNIC, the Company’s non-life premium had reached 248.94 million birr, recording a minimal increase of nearly 4.2% when compared to the previous year’s performance. Except for marine cargo/transit and engineering, which experienced negative growths of 32.6% and 11.3% respectively, all other classes recorded positive growth during the reported financial year. The highest growth recorded, 55.2%, occurred in the fire and general accident class (from 7.011 million birr in 2012 to 10.8 million birr in 2013).
The next highest growth on the list, a 32.3% increase, was registered by the pecuniary class while growth in the motor and the combined production of the small premium classes were limited to only 2.2% and 1.3%.
During the financial year, the company’s written premiums for long-term insurance reached 16.3 million birr, which registered a 7.2% growth compared with the previous year’s performance.
According to the annual report, UNIC’s profit after tax increased by 65% (from 36.234 million birr in 2011/12 to 59.9 million birr in the past fiscal year); against a significant decline in market share (from 6.9% in 2011/12 to 5.8% in 2012/13), it commanded shares of 8.9% and 10.4%, respectively, of the market’s profit after tax.
In the past fiscal year, the Company registered an 80.1 million birr underwriting surplus. In the same period, the insurance firm earned about 75 million birr gross profit before tax and it registered 84% more than the previous year. UNIC’s net profit after tax and legal reserves stood at 51.4 million birr for the 2012/13 fiscal year. UNIC has continuously registered growth; last year’s profit registered a 69.4% growth compared with the 2011/12 fiscal year.
The earnings per share grew by 31.5% to reach 677.13 birr, up from 514.89 birr a year ago.
The largest contribution to the year’s underwriting surplus of 44.14% came from the motor class.
The general assembly also elected three members to the Board of Directors, to replace the ones that have come to the end of their terms.
Birhanu Getaneh, the long-serving president of United Bank, and Asefash Abate, who is a member of the Company’s management, have replaced Ambanesh Kebede and Ayele Yebasa, who have also been part of the election for another term.
Kidanemariam Abadi, who was on the Board, was re-elected to serve another term