Bunna Insurance Company (BICo) nominated board members on Saturday, June 23, 2012, although it has raised less than a fifth of the capital that it had hoped to raise by this time.
National Bank of Ethiopia (NBE) licensed the company in August 2011. The promoters hoped to raise 50 million Br from the sale of 500,000 shares, but all they managed was 8.63 million Br, a little over half of the subscribed capital, according to a report presented by Zewdu Minas, promoter of the Insurance Company, during the election of the nominees.
The meeting was attended by 66pc of the 243 current shareholders. The Insurance Company has been promoted mostly by the same people who were behind the formation of Bunna International Bank (BIB), which was established in 2009 with a paid-up capital of 156 million Br.
The Insurance Company had set a minimum purchase of 50 shares worth 5,000 Br and a maximum of 10,000 shares.
The promoters stressed that they would transact all life and nonlife insurance, reinsurance, and related business, according to Kasahun Begashaw, project manager of the Company. The new firm will have no unique policies to introduce yet, in starting operations, Zewdu continued.
However, with increasing competition in the emerging sector, it does not seem promising for Bunna to join it with regular insurance policies, opined an expert. This expert expressed surprise that no policies specific to coffee were being introduced in the new business, where the major shareholders are coffee growers and exporters.
The shareholders elected nine nominees, of which three were the promoters of the Bank as well as the Insurance Company: Zewdu, Gezachew Amare, and Eskeziya Mengiste.
The names of the nominees were submitted to NBE, last week. If these names are approved, Bunna Insurance Company will become the 16th insurance company in the country.
There are two other insurance companies that are waiting for the central bank's approval, according NBE officials.
Board members, promoters, and other shareholders will get 20pc, 12pc, and six per cent of the first three yearly profits of the company.
All insurance companies in operation in Ethiopia have a cumulative 300,000 clients as of 2011. The sector's contribution to the national GDP growth during the same year was only 0.041pc, according to data from NBE.
The dominant actor in the sector is the state-owned Ethiopian Insurance Company (EIC), with a capital of 291 million Br, which is 30pc of the total capital registered for all 14 companies. Tsehay Insurance was the last to join the sector in this fiscal year.
Bunna plans to start operations in September.