Could you give a brief historical background of the Ethiopian Insurance Corporation?
The Ethiopian Insurance Corporation was formed in 1976.
In 1975 there were 13 privately owned companies that were nationalized then. The Ethiopian Insurance Corporation was formed by taking the assets and liabilities of those 13 insurance companies. So, the corporation by taking over those assets and liabilities of these companies has been operating as a sole company in the country.
Up to the end of 1994, we were working as a monopoly. But when working as a monopoly, we made those companies branches of the corporation. When doing so, actually, we had to merge some of them because some were big and some were small. We merged the small ones into bigger unit so that we would save on resources. As a result, we had 6 main branches in Addis Ababa and one main branch in Asmara, during that time Eritrea was part of Ethiopia. We made similar consolidation of those companies in Dire Dawa, Jimma and Nazareth towns. Our second phase was to open new branches and this has continued ever since, including a new branch in Djibouti. At the moment we have 21 Branches, excluding the three branches lost in Asmara, in Assab and in Massawa. Actually, we have paid the liabilities of those 3 companies but we have lost the assets.
Concerning the financial results of Ethiopian Insurance Corporation, could you state the financial status of the company?
Actually from the record I had last year, we were the leaders in the insurance market. And we took about 65 percent of the market share.
What are your expectations for this year?
Well, in fact I had the latest report covering the period up to December 1998. From the data I have so far, it appears that we have now 56 percent of the market share.
May be the market share is decreasing due to the establishment of new private insurance companies?
Yes, we were taking 100 percent from 1976 up to 1994. Previously, it was centrally planned economy in socialist state and everything was different, one company with no competition. But since 1994, the market has been liberalized. We are now following the free market economic system as a result there are 8 privately owned insurance companies at present. Actually there were 9 and one has gone out of the business due to its own problems. So, these companies have been taking part of our business. They have been competing with us not only by taking part of our market but also our experienced staff. Since there was no source for trained insurance personnel except for us, they are taking our trained staffs. But still we are able to retain more than 50 percent of the market share. The combined market share of the eight private companies does not exceed 43 percent.
We have a very huge capital base. It is estimated at about half a billion Birr. We have 5 big buildings in Addis and about 10 in the regions and some more are under construction. And we have also other properties in the outskirts of Addis Ababa. We have 3 pieces of land where we store wrecked vehicles and damaged properties for which we have paid claims. Out of the 3 plots, one is a very huge covering 56000 square meter. At the end of December our staff consists of about 1100 personnel .
Regarding the profitability, last year witnessed the highest profit since 1994. This is partly associated with our effort to restructure the Corporation. The implementation of more competitive company policy is also believed to have contributed positively to our increased profitability. To retain the remaining staff, we have changed salary scale and benefits. To be competitive we have changed prices and underwriting policies. We have a board which is a supervisor of our operation. The board is appointed by the Ministry in charge of public enterprises. Now we feel that the corporation is in a very competitive stage. On the issue of computerization, we are currently changing into a computerized system. Most of the operations are done manually. However, we expect to discontinue manual operation with in a short time. We are going to depend on fully computerized system, so that we will be more efficient and produce up to date reports for management information purposes.
| How do you see the best opportunities in the future growth of Ethiopian Insurance Corporation?
Since the Company has a very good financial base and professional staff new investors are actually relying more on us. For example, in six months time we have insured three big projects, a big ring-road around Addis, airport terminal for over 500 million Birr, and also a Brewery in Combolcha (a town 376 km. away from Addis).
Our leading re-insurer is the Munich Reinsurance Company of Germany which is the largest re-insurer in the world. So, we can insure almost any risk in this country without any problem and without any exception because we have good re-insurers financial base.
Is there no plan for privatization of EIC?
I have no idea. Such measures are decided by government policy.
What would be your advise for any foreign investors who want to come and invest in Ethiopia ?
From the insurance point of view, there is an efficient insurance company in the country which can insure any risk property, liability and life. So, I would like to assure you that they will get efficient services as regards insurance. But on the other sectors I can not say much. From political point of view, the only thing I can say is that the recent setback or the problem between Ethiopia and Eritrea is going to be a temporary one. I feel that I will not go on like this for a long time.
Could you give a brief historical background of your professional and work experiences?
I did my secondary education in commerce. Then I went to Addis Ababa University and I got B.A in Business Administration majoring in accounting. I did Masters of Business Administration in Scotland specializing in Management Information Systems and I did some correspondence studies with the Chartered Institute of Accountants in London, yet I have not finished. I have had more than 28 years of working experience in insurance. I started working in 1970 when I was really very young and I did my first degree by being an extension student and it took 7 years.
I started working for one of the private insurance companies then which was known by the name of Union Insurance Company owned by a Greek entrepreneur, he was initially a foreign insurance agent. Then in 1976 when this corporation was formed, I was appointed as a chief accountant of the corporation. In 1979 I was appointed as a controller general audit and inspection. In 1981 I was appointed as financial manager of the corporation. In 1990 I was appointed Deputy General Manager.
Following the change of government, I was appointed as the general manager of the Corporation in 1992.
As a more personal issue, what has been your personal satisfying achievement since you became the general manager of EIC?
We have reorganized this company now. I feel the staff is more motivated now. New recruits have joined the company. I really feel the corporation is now in the right direction. As a result, profit has shot up which emanated from the restructuring programme and the change in the operational policy. I feel also this year's profit will be higher than last year's. Hence the result we have achieved is very gratifying.
What would be your final message?
My final message is that any businessman can face many problems. But one has to look for different alternatives and he should not be influenced by temporary setbacks and he should be far-sighted. An investor should not be bogged down with temporary problems. |
