Nib Insurance Company S.C. (NIC) is embroiled in a high-profile legal battle worth more than Birr 144.5 million with the Ministry of Revenue (MoR) over disputed tax claims related to reinvested dividends and retroactive value-added tax (VAT).
The dispute comes amid a period of strong financial growth for the insurer, led by CEO Zufan Abebe, even as the country’s regulatory and economic environment grows more complex.
According to the company’s 2024/25 annual report, the core of the disagreement lies in the ministry’s decision to tax dividends that shareholders had reinvested to increase Nib’s paid-up capital.
Two separate lawsuits have been filed by the MoR on the matter. One suit concerns a Birr 24.3 million tax claim for the 2023 fiscal year, of which Nib has already paid 75 percent while pursuing its case at the Federal High Court. A second claim—valued at Birr 52.2 million—covers dividend taxes for the financial years 2018 to 2022. The company has paid the full amount but continues to challenge the decision, with the case now pending before the Federal Cassation Court.
The insurer argues that reinvested dividends, being capital contributions, should not be treated as taxable income, adding that such measures could discourage capital growth and investment in the insurance sector.
Adding to the tension is a controversial Birr 68 million VAT claim stemming from new legislation. Nib contends that the Ministry of Revenue began collecting VAT on insurance premiums before the proclamation was officially published in the Negarit Gazette.
Including fines and interest, the total assessment reached Birr 68,036,587.31. The insurer was required to pay 50 percent of the principal amount – around Birr 24.8 million – to file an appeal with the Federal Tax Appeals Commission. The company described the move as an “unexpected and sudden policy change” that placed “significant administrative and financial pressure” on operations.
Despite the legal challenges, NIC reported solid performance in the 2024/25 fiscal year. Total assets grew by 20.6 percent to Birr 4.1 billion, while gross profit before tax reached Birr 457.9 million, up 14 percent from the previous year. Earnings per share stood at Birr 153, an increase of 30.6 percent over 2023/24.
Board Chairman Shisema Gebresilassie credited the strong results to “a culture of prudent and efficient resource use” and effective management amid inflation, insecurity, and shifting policy conditions.
The report also highlighted broader pressures on the insurance sector, including liquidity shortages, inflation, and rising costs of motor vehicle parts—all contributing to increased claims payouts. Nib paid a total of Birr 688.7 million in compensation across its operations, with motor insurance alone accounting for 80.2 percent of general insurance claims.
General insurance represented 90.9 percent of total revenue (Birr 1.58 billion), while life insurance contributed 9.1 percent (Birr 157.8 million). Although life insurance revenue rose by 13 percent, the segment recorded a total underwriting loss of Birr 65 million, mainly due to high medical and micro-insurance claims.
During the same fiscal year, the National Bank of Ethiopia (NBE) nullified Nib’s earlier board election, prompting a midyear re-election process that delayed several strategic initiatives.
According to recent NBE data, Ethiopia’s insurance industry now includes 18 licensed insurers, of which 17 are privately owned. The sector’s combined Gross Written Premium (GWP) rose to Birr 40.6 billion in 2024/25, up 43 percent year-on-year. Of this, Birr 37.9 billion (93.4 percent) came from general insurance products, while Birr 2.7 billion (6.5 percent) was derived from life assurance.
