Promoters of Amhara Insurance are finalizing preparations to establish an insurance firm with two billion birr in paid-up capital. Amhara Bank is expected to become one of the firm’s most influential shareholders. It is permitted to possess up to five percent ownership in the business.
Promoters anticipate that over 14,000 shareholders of the Bank will buy a stake in the upcoming insurance firm. The founding committee, which has 34 members, is already completing plans to make the insurance business a reality, with a target to involve both life and non-life lines of business.
Committee members are already being given roles to carry out the preparation work, according to Solomon Alebachew, the committee’s secretariat. The committee’s chairperson, deputy chairperson, secretariat, and project office heads have already been chosen and will be submitted to the Ethiopian National Bank (NBE).
Amhara, one of the fourth-generation banks, is expected to be the sister company, with a subscribed capital of 6.5 billion birr, of which four billion birr is paid. The firm is registered at the NBE under the name Amhara Insurance Sharing Company, according to the Committee. Solomon says the next step would be to float shares after submitting complete information on the establishing committee to the NBE. He is certain that the company will enter the market with a capital of two billion birr.
If the committee’s expectations are met, Amhara Insurance will be the first business in the insurance market to be established with this much capital. Insurance companies that entered the market three decades ago began with a paid-up capital ranging from three million to 15 million birr.
The maximum subscribed capital presently held by an insurance company is four billion birr, with the majority of them having half a billion birr as paid-up capital, except for the Ethiopian Insurance Corporation, whose capital is above one billion birr with a market share of over 45 percent in the insurance industry. According to a recent NBE report, the total capital of insurance businesses in Ethiopia is 14 billion birr.
Over three decades ago, the prerequisite for establishing an insurance business was just three million birr, which was subsequently increased to 75 million birr. The directive was amended last year, upping the minimum capital requirement to 500 million birr.
Solomon disclosed to The Reporter that Amhara Bank is anticipated to have the biggest stake in the insurance company.
One of the grounds for establishing the insurance business with two billion birr in capital is the certainty that the bank would be a substantial stakeholder in the sister company, according to him. Amhara Bank has 141,000 shareholders and received 8.7 billion birr in deposits in its first six months of existence. The bank has also promised to enhance its capital to 20 billion birr.
Amhara Insurance is planning to commence operations with both life and non-life insurance products.
