Africa Insurance Company registered impressive achievements during the 2017/18 fiscal year, despite economic challenges in the insurance sector.
African Insurance is one of the oldest private insurance companies and one of the three most profitable. They amassed 585 million birr from life and general insurance premiums.
Africa was formed 24 years ago. It has been able to collect over half a billion birr in premiums. During the 2016/17 fiscal year they earned 553 million birr from general and non-life insurance premiums. A year ago that figure was 494 million birr. “The growth of general insurance for the year stood at 12 percent,” Kiros Jiranie, President of Africa Insurance, said.
The company collected 32 million birr from life insurance, an increase from 27 million during the 2016/17 fiscal year.
In the reported year the company settled 391 million birr in claims, which is a 16 percent increase. A year ago Africa Insurance settled 314 million birr claims for general insurance.
From the underwriting result the company generated 70 million birr with 41 percent increase while the investment income has also grown. The investment income mainly incorporated via interest and other investments contributed 28 million birr and 46 million birr respectively.
Before tax and after expenses the insurance firm earned 51 million birr which is an increase from 37 million birr in 2016/17 fiscal year.
The company’s net profit after tax will be 44 million birr which is a high amount of growth when compared with 35 million birr a year ago.
The earnings per share have reached at 25 percent with 19 percent growth, according to the President of Africa Insurance.
The insurance sector has been dominated by the central market that the Addis Ababa premium collection is taken 70 percent of the sector and the balance is goes to regions.
The class of business that dominate the sector is motor, which is at some point enforced by the government in related with third party and also the accidents alerts the society to be insured.
Due to reduction of construction in the year the engineering class of business and pecuniary has reduced, while it has showed some growth. In related with the hard currency shortage the marine insurance business has declined at the stated period. The situation has forced the sector more stiff and competing between the insurers on price.
Kiros, who is the former head of the Association of Ethiopian Insurers, says that lack of awareness in the society means that the county has not been able to collect the required premiums proportional to the population and the economy. He thinks insurance companies need to become more creative in developing products and raising awareness. He also wants the government to help promote and undertake studies via actuaries to expand the life insurance business, which is common in other parts of the world. “Insurance companies may focus on the short term target to make a profit but the government can look at the big picture,” he added.
The premiums collected by insurers is considered one of the major sources for investments, however it is limited when it comes to Ethiopia because the sector has not been growing. Kiros says that his company is one of the top three private insurers excluding the state giant Ethiopian Insurance Corporation which dominated the sector at 35 percent in terms of premium market share.
Kiros claimed that his company’s assets have grown to over one billion birr. For the current year the company will move its headquarters a building which has 12 stories and thee additional basements for parking which was constructed at a cost of 160 million birr in the Japan area at African Avenue (Bole Road). The company also has a building at Bisrate Gabriel which cost 200 million birr.
Africa Insurance takes in 585m birr from premiums
ECX warehouse receipt can be used as collateral
Ethiopia Commodity Exchange (ECX) is in the process of giving out warehouse receipts to traders to use as collateral when they need short term loans from the banks. The new service expected to begin this fiscal year, has not yet gone over their plans with stakeholders. The following will be written on the ECX warehouse receipt: the serial number, name and location of warehouse, license number, date of receipt and duration of storage, name of commodity, quantity, quality, grading and standardization.
The loan amount depends on the nature of the commodity, its market price and minimum support price. The bank gives the loan if the collateral manager approves the stock in storage.
The depositor endorses the warehouse receipt in favor of bank and takes a loan against the commodity. Once the bank receives the loan from the buyer, the commodity can be released.
Wendemagen Negera CEO of ECX said the system will allow ECX’s traders to find another financial option for their business.
“Usually land tittle deeds and vehicles are used for collateral when business people need loans from banks but with different agricultural products including sesame and coffee that are stored and traded in our stores have values and can be used for collateral for bank loans.”
“Now we are working to use the stored products as a collateral which I expect to happen soon.’’
Currently ECX uses the stored products to transact with buyers and sellers.
In related news ECX signed an agreement with Abay Bank to allow commodity buyers and sellers to transact through the bank.
Abay is the 15th bank to work with ECX on these issues.
At the signing ceremony Yewhala Gesesse, Abay Bank President said the deal will enable traders use financial services easily.
“We are happy to serve ECX traders to use our banks for their transaction and we will serve them to facilitate there work in efficient ways. “
Currently Abay Bank has 167 branches across the county while ECX has 52 stores in the country and it has planned to build five stores in this fiscal year.
Ethiopia sees highest number of internally displaced persons in first half of 2018, report says
Ethiopia has seen the highest number of people forced to flee their homes within their country in the first half of 2018, according a report by the International Displacement Monitoring Center (IDMC).
According to the 2018 Global Report on Internal Displacement, conflict has uprooted some 1.4 million Ethiopians from their homes since the start of the year, according to the report. This has been largely due to ethnic clashes in Gedeo and West Guji region in southern Ethiopia, and continued violence in the Oromia-Somali border region.
“It is sad that 1.4 million people fleeing violence isn’t making global headlines. The world has turned a blind eye to Ethiopia,” warned Nigel Tricks, Regional Director of the Norwegian Refugee Council (NRC). “Families we’ve met who have fled fighting are living in dire conditions, and dismal international funding is being channeled to help them.”
The report points out that the government and aid agencies are working hard to respond, but with around one million newly displaced people in Gedeo and West Guji sheltering with host communities and in overcrowded communal shelters, food provision, water and health services are stretched beyond capacity. The affected area was already one of the most densely populated parts of Ethiopia, with the influx of people now doubling the population in some areas. The current rainy season is also worsening peoples’ living conditions and hindering the humanitarian response.
“People tell us they are keen to return home, but they fled with nothing and need to know they can access support to rebuild their lives. It’s important that any returns are voluntary and sustainable. Families must also be confident of the safety of areas before moving back,” said Tricks.
Violence also continued to flare in the Oromia-Somali border region, with 200,000 people fleeing their homes in the first half of the year. Another 500,000 people fled clashes in the last quarter of 2017. Nearly all areas along the regional border have been affected. The region has been hard hit by food shortages, which has compounded the crisis.
According to the IDMC, with 30.6 million internal displacements in 2017, which is the equivalent of 80,000 people displaced each day, it’s time for an honest conversation, led by affected countries and with support from the international community, on the most effective ways to turn the tide on internal displacement.
Noah introduces new scheme for home buyers
One of the most reliable real estate developers, Noah Real Estate plc, announced the introduction of a new residential and office housing scheme for locals and the Diaspora.
The company has an innovative platform which has helped change a sector that is vulnerable and frequently suffers from unreliability because they have been able to deliver homes on time and in line with their contract.
At a press conference on Thursday September 13 a manager for the company said that despite challenges like price hikes on materials used for building homes, like steel, the hard currency shortage, difficulty securing land from the city administration, and troubles accessing water meters and power from the government it has achieved remarkable success over the past year.
In relation to their recent transfer of 120 residential homes at Noah East Gate Apartments the real estate developer stated that it will come up with new business platforms to expand access to homes for citizens and the Diaspora.
Abiy Hailemariam, a manager at Noah, said that his company will come up with a mortgage scheme with partner banks. “The new scheme will allow home buyers to pay off their homes over 20 years,” he added.
Because there has been significant political change and stability lately, more Diaspora want to own property in the country, the company’s management said. To encourage this Noah is offering a ten percent discount for diaspora.
They also plan to offer a lease to own housing scheme. “With the goal of stabilizing the housing sector we plan to offer 100 homes via a rent to purchase option initially,” Rateneh Fassil, a company leader, stated. They already have 60 homes that are ready to be purchased with this option.
This is the second time in five months the company has transferred homes. This ceremony was held in Summit.
Recently the company has transferred 226 residential houses located at Atlas Hotel area, in the central part of the city. The 120 homes transferred today were located in eastern part of the city.
The company mainly focus on constructing houses before they are sold. So far they have built 3,600 homes in 14 projects. This fiscal year they plan to finish five projects.
The company leaders say more incentives are needed to reach lower income buyers like tax exemptions and duty free schemes and if they did this the price of homes would decrease.
They argued that the government has not provided land to real estate developers over the last 12 years. “We are securing plots from individuals through partnerships for the development of office and residential apartments,” Ratenew said. He claimed that if the government provides plots in the capital the rate may go down. According to the real estate developers, the minimum price for a house is one million birr.
