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Collecting a paid up capital of 16.6 million Br,
Lion Insurance SC, the 10th insurance company in the
country, chose its nine Board members in its first
general assembly held on Thursday, July 13, 2007, in
Axum Hotel.
Though the Insurance Company has 309 shareholders,
its sister company, Lion International Bank SC,
which was established six months ago with a capital
of 108 million Br, commands 10pc of its total
capital.
The directive issued by the National Bank of
Ethiopia (NBE), the regulatory body of the country’s
financial institutions, puts the threshold paid up
capital requirement for life insurance companies to
three million Birr, while the requirement for
non-life insurance companies is four million Birr.
According to Lion Insurance, the capital raised by
the Company is more than five fold higher than the
minimum requirement set by NBE.
“The shares are not concentrated in certain segments
of society,” Haddush Hentsay, president of the
Insurance Company told Fortune. “They are
rather evenly distributed among the shareholders.”
A steering committee was set up to work towards the
company’s establishment over the past two years.
The nine Board members that were chosen by the
shareholders are Abdu Adem, Rahel Alemayehu, Gezai
Embaye, Yonas Alemayehu, Nega Gebreegziabher,
Haddush Hentsay, Mehari Redahe, Alem Asfaw and G.
Egziabher Ambaye. These members will choose the
Board Chairman which will be entitled to a 1,500 Br
monthly payment and a 200 Br allowance per meeting.
While the Board members enjoy a 1,000 Br monthly
payment and a 200 Br allowance for every meeting
they participate. Moreover, whenever the Insurance
Company registers a profit over 7.5pc, both the
Chairman and Board members are given five per cent
of the profit.
“Lion Bank has 400,000 shares in the insurance
company, holding almost one million Birr of its
capital,” Tsegaye Tetemke, a veteran in the banking
sector with 28 years of experience and president of
the Bank told Fortune. The Bank currently has
5,000 shareholders.
According to a sector expert, the insurance
industry, composed entirely of firms created since
1991, other than the state-owned Ethiopian Insurance
Corporation which commands the largest market share
in terms of revenue (45pc), is small when compared
to other countries at a similar level of
development. These companies generated 840 million
Br in revenue from premiums sold during the 2006/07
budget year, amounting to a 25pc increase from the
previous year.
The expert added that part of the industry growth
may be attributed to the construction boom where
insurance policies are commonly purchased, though
the growth is being stunted by companies competing
with similar policy offerings and undercutting
prices.
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