The CEO of Ethiopian Insurance Company, Yewondwossen Itefa, has been approved by the National Bank of Ethiopia to head the newly established Ethiopian Reinsurance SC (Ethiopia Re).
The approval came after the Board of Directors of Ethiopia Re recently voted Yewondwossen to be the first CEO.
As part of the requirement to go operational, the company has been waiting for the NBE for the approval for the candidate to assume one of the most sought-after jobs in the Ethiopian financial services sector.
According to sources, the central bank’s approval is effective as of last week.
The reinsurance company was officially established last year in October and once it commences operations it is expected collect some 669 million birr in paid-up capital more than the minimum requirement set by NBE. However, according to NEB’s Directive the minimum paid up capital of a reinsurer must be half a billion birr and a single shareholder cannot own more than 5 percent of the total shares, similar to the provision governing private banks. However, state enterprises are allowed to buy more than five percent of the total shares.
The majority of insurance companies that have membership in the reinsurance firm and other non-member insurance companies have expressed their interest to buy maximum shares they are entitled to buy, the reinsurance firm steering committee members had said a year ago. Following the provision s of the NEB directive, the maximum stake an individual insurance company can buy is 50 million birr.
The move to establish the reinsurance company comes exactly two years after the National Bank of Ethiopia (NBE) issued a Reinsurance Company Establishment Directive (No. SBB/1/2014) allowing the formation of national reinsurance companies. The directive gives an exclusive right to Ethiopians and Ethiopian companies to establish reinsurance companies in the country.
The Association of Ethiopian Insurers (AEI) took the initiative to form a reinsurance firm by its members numbering 13.
The insurance history in Ethiopia dated back a century, however the sector receives the reinsurance service from foreign countries.
Establishing a national reinsurance company aims at promoting financial resource mobilization and reducing costs related to cross border reinsurance transactions. It is aimed at enhancing underwriting capacity and solvency of direct insurers by providing technical support and cover against accumulated and catastrophic losses, according to the directive.