Zemen Insurance, the latest entry in the insurance business, netted 18.3 million Br in profit during its first year of operations. The profit was mainly generated from investment activities.

With an original par value of 5,000 Br, the earnings per share (EPS) of the nation's 18th insurer also registered at 19.7pc. The company commenced full operations just 25 days ahead of the previous fiscal year's conclusion after securing its license from the National Bank of Ethiopia (NBE) in January of this year.

The firm had plans to commence operations early, according to Melaku Ezezew, the board chairperson of Zemen, which was founded by 942 shareholders and raised 81.5 million Br in paid-up capital from the subscribed capital of 114.6 million Br. Even though the establishment of the insurance company was initiated during the general assembly of Zemen Bank, the Bank did not invest in the insurance firm due to its investment policy prohibiting it from investing in companies that are less than three years old.

"Even though we planned to start operations early," said Melaku, "we had to start late due to the Novel Coronavirus (COVID-19) and instability around the country."

Shumetie Zerihun, the founding CEO of Zemen Insurance, says that the firm's management made a wise decision in keeping the money in banks to generate income until the firm started operations.

"We were getting between a 12.7pc and 13pc interest rate on time deposits," said Shumetie. "The rate was determined by a competitive bidding process."

From investment activities including interest on time deposits, saving accounts and government bonds, Zemen earned 20.2 million Br. It also gained an additional 5.7 million Br from other operating income, including service fees from the sale of shares and income from the recovery of bad debts. However, it registered no income from commission fees.

Zemen should keep on performing well in investment activities, according to Abdulmenan Mohammed, a financial statement analyst with two decades of experience.

Between February and early June, the firm's management had been focused on preparation activities. This involved organising human resources and re-charting procedures by working on policy manuals and insurance policies, revising feasibility studies, and designing a three-year strategic and operational plan.

"To control expenses," Shumetie said, "the organising committee's chairperson and I undertook all these activities."

Out of the Bank's net profit, the board of directors have proposed 15.1 million Br, or 82.5pc, be allocated as a dividend payout.

This level of dividend for a new entrant is awe-inspiring and delightful to its shareholders, according to Abdulmenan.

Hailegebriel Demeke, one of the founding shareholders, agrees with Abdulmenan's comment. He says that most new businesses operate with losses during their first months.

“I never expected a profit this year,” said Hailegebriel, who received a 16pc dividend during the past fiscal year. "Its performance was magnificent and even better than some [of the other] insurance companies."