NEW BUSINESS ETHIOPIA
Expanding its marketing, the state-owned Ethiopian Insurance Company (EIC) is set to open its first branch out of Ethiopia in Juba, South Sudan.
Presenting annual report of the company, this morning (August 28, 2010) at its headquarter in Addis Ababa, Managing Director of EIC, Yewondwosen Eteffa, stated that the company has completed the feasibility study and expecting final approval to open office in Juba.
When EIC opens the office it will be the second Ethiopian government firm to operate in juba next to Commercial Bank of Ethiopia, which more than 50 percent market share in the local banking industry.
EIC’s profit for the Ethiopian budget year ended July 7, 2010 (July 8, 2009 – July 7, 2010) has increased around 56 percent from previous year and reached 146 million birr (equivalent to 10.7 million US dollars at current exchange rate) before tax.
The company was expecting more than stated amount of profit. Meanwhile, the profit is less due to the compensation paid for the Ethiopian Airlines’ claim for its crashed plane while flying from Beirut to Addis in January 25, 2010.
The claim incurred in aviation was 1.2 billion birr (88.1 million US dollars at current exchange rate) than EIC expected this year. It is also higher by 1.3 billion birr (95.4 million US dollars at current exchange rate) from the aviation industry of the country claims last year, according to Yewondwosen.
“As a result of this, contrary to our expectation and the previous year the annual corporate loss ratio of EIC has climbed to 231.4 percent,” he noted.
Next to the aviation, the company has also paid 166.4 million birr (12.2 million US dollars at current exchange rate) for vehicle insurance claims, which is also increasing annually at alarming rate.
The total asset of the company has now increased to 1.4 billion birr (102 million US dollars at current exchange rate) from it was at 1.2 billion birr, according to Yewondwossen’s report. Out of this, the insurance company has invested so far a total of 150 million birr (around 11 million US dollars).
EIC is the largest and oldest insurance company in Ethiopia established by the government in 1976 and has a total of 39 branches in the country followed by Awash Insurance Company, which has 22 branches by the end of September 2009.
Including the new private one, Abay Insurance Company, Ethiopia has a total of 12 private insurance companies and one state-owned-EIC.
Like the banking industry of the country, the outreach of insurance companies was very low. According to the 2008/9 annual report of the National Bank of Ethiopia, one insurance branch serves about 409,694 people and about 49 percent of the total branches are operating in the capital - Addis Ababa.