
Fortune News | Dec 25,2021
Oct 30 , 2021
By SAMUEL BOGALE ( FORTUNE STAFF WRITER
)
Shareholders of Awash Insurance may have reasons to get displeased despite a remarkable net profit the firm has made from its operations last year.
Awash has reported a 270 million Br profit in 2020/21, a jump by 23pc from the previous year. However, earnings per share (EPS), industry jargon for the benefit to shareholders, dropped to 178 Br, an 11pc fall, after the firm decided to boost its capital base.
Awash's profit demonstrates how little the financial sector's bottom line is affected in the face of instability, the COVID-19 pandemic and an economic slowdown tightening the budgets of businesses and individuals.
Despite the economic downturn and increasing instability, Awash has opted to boost its paid-up capital to 755 million Br last year, maintaining its position as one of the highest-capitalised insurance firms in the industry. The aggregate capital of the 18 insurance companies reached 10.6 billion Br in March 2021, according to a quarterly report the National Bank of Ethiopia (NBE) releases. This growth represents an 18pc increment from last year, and private insurers account for nearly three-quarters of it.
The banking industry has also seen a rise of 13.6pc in total capital, hitting 125 billion Br last month. Private commercial banks account for a little over half the amount.
“Given the various challenges Awash faced during the year, the profit increment, as well as capital buildup, are satisfactory,” said Kebede Borena, board chairperson of Awash Insurance, addressing shareholders met at the Hilton Hotel on October 30, 2021.
Ebsa Mohammed, an insurance expert and manager at Alpha Consultancy, applauds the efforts to increase capital.
"Growth in paid-up capital comes at the cost of earnings per share," said Ebsa. "It's a good sign either way."
Not all shareholders were displeased to see a drop in return for their investment.
Amsalu Bezuneh, a businessman in export and import, is one of the 1,670 shareholders. He has no qualms with the firm's performance this year and plans to buy more shares.
“The EPS is still high compared to other insurance companies," he told Fortune. “Awash is still registering high profits.”
However, Ebsa argues that insurance companies could have done more considering growing demands for risk coverage due to the instability in the country.
“Insurers should introduce more products," Ebsa said.
Awash Insurance's executives say they are doing that.
“We're introducing new insurance products,” said Gudissa Legesse, CEO of the company.
Awash launched a mobile phone insurance policy earlier this year, the second firm to offer the product, after Nyala Insurance. It also launched takaful, a Shariah-compliant insurance product, in July. Most recently, the firm has applied to the regulatory authorities to begin a clinical-trial coverage policy.
The company has recorded good results in other categories as well. The total assets Awash holds increased by a fifth to 3.5 billion Br, while gross written premiums climbed 43pc to 1.28 billion Br. For the second year in a row, Awash managed to open only one new branch (in Debre Birhan, Amhara Regional State), bringing its total network to 59 branches.
The 27-year-old insurance firm also kicked off the implementation of a 10-year roadmap dubbed 'Transforming AIC: Vision 2030' last year developed by Deloitte.
PUBLISHED ON
Oct 30,2021 [ VOL
22 , NO
1122]
Fortune News | Nov 03,2024
Fortune News | Dec 11,2021
Viewpoints | Apr 20,2019
Fortune News | Mar 07,2020
Exclusive Interviews | Jan 05,2020
Dec 22 , 2024 . By TIZITA SHEWAFERAW
Charged with transforming colossal state-owned enterprises into modern and competitiv...
Aug 18 , 2024 . By AKSAH ITALO
Although predictable Yonas Zerihun's job in the ride-hailing service is not immune to...
Jul 28 , 2024 . By TIZITA SHEWAFERAW
Unhabitual, perhaps too many, Samuel Gebreyohannes, 38, used to occasionally enjoy a couple of beers at breakfast. However, he recently swit...
Jul 13 , 2024 . By AKSAH ITALO
Investors who rely on tractors, trucks, and field vehicles for commuting, transporting commodities, and f...
Feb 16 , 2025
Madame Kristalina Georgieva, managing director of the International Monetary Fund (IM...
Feb 9 , 2025
This week, the African Union's (AU) annual summit in Addis Abeba is set to be more th...
Feb 1 , 2025
Urban renewal is seldom gentle to those on the receiving end of redevelopment. Take s...
Jan 25 , 2025
Grand ambitions have long driven Ethiopia's successive leaders, but they remain weigh...