FEDERAL NEGARIT GAZETA

OF THE FEDERAL DEMOCRATIC REPUBLIC OF ETHIOPIA

18th Year No. 57
ADDIS ABABA 22nd August, 2012

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CONTENTS

Proclamation No. 746/2012
Insurance Business Proclamation ……… Page 6462

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PROCLAMATION No. 746/2012.

A PROCLAMATION TO PROVIDE FOR INSURANCE BUSINESS

WHEREAS, the insurance sector plays an important role in economic development through providing insurance coverage against risks, the provision of alternative means for savings and mobilization of financial resources from within and outside the country;

WHEREAS, to ensure the reliability and stability of the insurance sector, it has become necessary to put in place a comprehensive legal framework;

NOW, THEREFORE, in accordance with Article 55(1) of the Constitution of the Federal Democratic Republic of Ethiopia, it is hereby proclaimed as follows:

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PART ONE

GENERAL

1. Short Title

This Proclamation may be cited as the “Insurance Business Proclamation No. 746/2012”.

2. Definitions

In this Proclamation, unless the context otherwise requires:

1/ “actuary” means a person who provides advice on financial questions and contingencies involving insurance in general and life insurance and pension schemes in particular;

2/ “admitted assets” means the amount of assets to be considered in the calculation of margin of solvency;

3/ “admitted liabilities” means amount of liabilities to be considered in the calculation of margin of solvency;

4/ “bank” means a company licensed by the National Bank to undertake banking business or a bank owned by the government;

5/ “capitalized expenditure” means preliminary expenses, share selling commission and brokerage fees paid by an insurer under formation, and any other item of expenditure not represented by tangible assets;

6/ “chief executive officer” means a person, by whatever title he may be referred to, who is primarily responsible for the day-to-day management of the affairs of an insurer;

7/ “class of insurance” means the type of insurance business in respect of which an insurer is authorized to carry on;

8/ “company” means a share company as defined under the Commercial Code, the capital of which is wholly owned by Ethiopian nationals or organizations wholly owned by Ethiopian nationals and registered under the laws of, and having its head office in, Ethiopia;

9/ “directive” means a directive issued by the National Bank;

10/ “director” means any member of the board of directors of an insurer, by whatever title he may be referred to;

11/ “employee” means a chief executive officer, a senior executive officer or any other employee who is appointed or hired by an insurer to carry out its day-to-day operational activities;

12/ “financial institution” means an insurance company, a bank, a micro finance institution, postal savings, money transfer institution or such other institution as determined by the National Bank;

13/ “financial year” means the financial year of an insurer running from July first to June thirty of the following year;

14/ “general insurance business” means all classes of insurance business other than long term insurance business;

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Federal Negarit Gazeta No. 57 22nd August 2012 ……… page 6464

15/ “influential shareholder” means a person who holds directly or indirectly two percent or more of the total subscribed capital of an insurer;

16/ “insurance” means an undertaking by an insurer to indemnify another person, in exchange for consideration called premium, against damage, destruction, loss or liability in respect of a certain risk or peril to which the object of the insurance may be exposed or to pay a sum of money or other thing of value depending upon the happening of a certain event;

17/ “insurance agent” means a person who on behalf of an insurer and for commission:  
a) deals directly with the public in soliciting insurance; and b) acts or assists in any manner in connection with the negotiation, continuance or renewal of insurance.

18/ “insurance auxiliary” means an insurance agent, an insurance broker, loss assessor or insurance surveyor;

19/ “insurance broker” means a person who on behalf of the insuring public and in exchange for commission:  
a) deals directly in arranging insurance; b) acts or assists in any manner in connection with the negotiation, continuance or renewal of insurance cover; and c) provides consulting services with respect to insurance or insurance claims.

20/ “insurance policy” means a document evidencing a contract of insurance whereby an insurer undertakes, against payment of premiums, to pay indemnity or the benefit specified in the policy to the insured where condition specified in the policy fulfilled or risk materialized, and includes a certificate, interim receipt, renewal receipt, or any document evidencing a contract of insurance;

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Federal Negarit Gazeta No. 57 22nd August 2012 ……… page 6465

21/ “insurance surveyor” means a person who engages in surveying risks and in advising on the rate of premium and terms and conditions of policies of general insurance business including recommendations for the improvement of risks;

22/ “insurer” means a person that issues or agrees to issue an insurance policy or undertakes, or agrees to undertake the obligations of an insurance policy;

23/ “life insurance” means a contract whereby the insurer undertakes, against the payment of premium, to pay to the insured or to any beneficiary a specified sum on certain conditions dependent upon the life or death of the insured;

24/ “long term insurance business” means insurance business of:  
a) life insurance; b) annuity; c) pension; d) permanent health insurance; e) personal accident or sickness insurance underwritten by the insurer as incidental to any of the businesses referred to in paragraph (a) to (d) of this sub-article; or f) any other class of insurance business as may be determined by directive.

25/ “loss adjustor” means a person who undertakes the investigation, negotiation, adjustment and conclusion of agreement on insurance claims on the basis of relevant laws and insurance policy;

26/ “loss assessor” means a person who, in the case of a claim under a policy of general insurance business, undertakes to investigate and assess the cause and extent of loss on behalf of the insurer or the insured;

27/ “main class of insurance business” means either long term insurance business or general insurance business as the case may be;

28/ “margin of solvency” means the excess of admitted assets over admitted liabilities to be maintained for each main class of insurance business;

Federal Negarit Gazeta No. 57 22nd August 2012 ........page 6466

29/ “insurance policyholder” means a person who owns an insurance policy or any other person who has legal right to claim the benefits under that insurance policy;

30/ “qualification criteria” means the requisite education, experience and propriety to be prescribed by directive;

31/ “receiver” means the National Bank or a person appointed by the National Bank to take control of a problem insurer for purposes of restructuring the insurer’s operations in order to make it sound or to terminate its existence;

32/ “reinsurance” means an agreement whereby a person provides insurance to a risk assumed by an insurance company;

33/ “reinsurer” means a person that provides protection through the sale of reinsurance contract;

34/ “reinsurance broker” means a person who places reinsurance for an insurer;

35/ “senior executive officer” means any officer of an insurer, by whatever title he may be referred to, who is deputy to the chief executive officer or who is directly accountable to the board of directors;

36/ “technical provisions” means provisions for policy liabilities and includes:

a) actuarial reserves in the case of long term insurance;

b) reserve for unpaid claims and adjustment expenses;

c) reserve for unearned premiums, in the case of general insurance business;

d) incurred but not yet reported claims; and

e) other provisions as may be determined by directive.

37/ “investment-insurance linkage” means a policy issued by an insurer engaged in long term insurance business of which the amount of the insurer's liability depends on the value of returns from applying the premium in selected investments, but which provide guaranteed benefits on maturity or death of the insured;

Federal Negarit Gazeta No. 57 22nd August 2012 ........page 6467

38/ “National Bank” means the National Bank of Ethiopia;

39/ “person” means any natural or juridical person;

40/ any expression in the masculine gender includes the feminine.

PART TWO

LICENSING INSURANCE BUSINESS

3. Requirement for Obtaining License

1/ It is prohibited to transact insurance business in Ethiopia without obtaining an insurance business license from the National Bank.

2/ No person may use the word “insurance” or “insurer” or its derivatives as part of the name of any financial business unless it has secured a license from the National Bank.

3/ Without the prior written approval of the National Bank, no insurer may:

a) carry on insurance business at any place other than that authorized by the National Bank, or close an existing place of business;

b) introduce new insurance products;

c) merge with or takeover the business of another insurer;

d) transfer all or significant portion of its policies or enter into any agreement for the sale or disposal, by amalgamation or otherwise, of its business, or effect major changes in its line of business;

e) transfer or otherwise dispose of the whole or any part of its property, whether inside or outside Ethiopia, other than in the normal course of conducting business;

f) redeem its own shares or effect a reduction of its capital other than reduction through operating losses;

g) amend its memorandum or articles of association; or

h) alter the name under which it is licensed to carry on insurance business.

Federal Negarit Gazeta No. 57 22nd August 2012 ........page 6468

4/ Where the National Bank has a reason to believe that a person, in contravention of sub-article (1) of this Article, is advertising for or carrying on insurance business, it may, in order to ascertain the situation, require that all books, minutes, accounts, securities, records, vouchers and other documents which are in the possession or custody of such person be submitted to it and inspect same or cause same to be inspected.

5/ Where any person undertakes insurance business without obtaining license and has received premiums or become obliged to perform under a contract of insurance, the National Bank may apply to the Federal High Court for ordering the speedy and efficient return of such premiums or the performance by such person of his contractual obligations.

4. Conditions of Licensing

1/ The following conditions shall be fulfilled to secure an insurance business license:

a) a duly completed application in the prescribed format together with other accompanying documents as may be specified by directive shall be submitted;

b) an investigation fee, as specified by the National Bank, shall be paid at the time of submitting the application;

c) upon filing the application with the National Bank, the founders shall, at least once a week for a period of four consecutive weeks, publish, in a form prescribed by the National Bank, a notice of intention to engage in insurance business in widely circulating newspapers;

d) the insurer shall be formed as a company and its memorandum and articles of association shall be approved by the National Bank before registration with the appropriate government organ;

e) all its issued shares shall be subscribed and, at a minimum, one-fourth of the subscribed shares shall be fully paid in cash;

f) the minimum paid-up capital prescribed by the National Bank shall be paid in cash and deposited in a blocked bank account in the name of the prospective insurer;

Federal Negarit Gazeta No. 57 22nd August 2012 ........page 6469

g) the directors, the chief executive officer and senior executive officers of the insurer shall meet the qualification criteria prescribed by directive;

h) influential shareholders of the insurer shall meet the propriety criteria prescribed by the National Bank;

i) a comprehensive proposal in respect of the risk management systems, including reinsurance arrangements, internal control systems and information technology systems, as well as policies and procedures consistent with the nature and scale of the business shall be submitted;

j) sound and feasible business plan for the future conduct and development of the business shall be submitted;

k) the name of the company may not be the same or confusingly similar to that of licensed existing insurers;

l) the premises and the office arrangement in which business is conducted shall meet the standards prescribed by the National Bank.

2/ Any person who objects the involvement of any of the founders as shareholders of the prospective insurer may submit, within thirty days starting from the date of the last publication under sub-article (1)(c) of this Article, his objection in writing, with supporting evidence, to the National Bank.

3/ The National Bank shall initiate an inquiry into the objection under sub-article (2) of this Article and the proceedings of such inquiry shall be published and be considered in deciding whether or not to issue the license.

4/ Without prejudice to the conditions specified under sub-article (1) of this Article, the National Bank may issue directive to prescribe additional conditions of licensing.

Federal Negarit Gazeta No. 57 22nd August 2012 ........page 6470

## 5. Issuance of License

1/ After evaluating all the relevant information, the National Bank may decide to issue a license to an applicant, with or without conditions or limitations, if it is satisfied that the requirements for a license have been met.

2/ The conditions or limitations to which a license shall be subject may, among others, include:

a) limitation on the class of insurance that may be written;

b) limitation on the validity period of the license;

c) limitation on the amount of premium that may be written in a particular period or class of insurance;

d) restriction on investments, including a prohibition on the ownership of a subsidiary or a particular type of subsidiary; and

e) conditions limiting the business to the reinsurance of risks.

3/ The National Bank shall decide on an application to carry on insurance business within 90 days from the last date of receipt of all information to be submitted in accordance with sub-article (1) of Article 4 of this Proclamation.

4/ A license issued under this Proclamation shall specify the classes of insurance in respect of which the holder of the license is authorized to carry on.

5/ The license shall be issued upon payment of the licensing fee prescribed by the National Bank.

6/ A license granted by the National Bank pursuant to this Proclamation shall constitute final authorization to carry on insurance business.

7/ The National Bank may, at any time, amend the license of an insurer, by imposing any conditions or limitations thereto.

8/ The National Bank may grant license to a reinsurer and the manner of licensing of such business may be prescribed by directive.

9/ The National Bank may issue directive prescribing the manner of licensing a reinsurance broker.

Federal Negarit Gazeta No. 57 22nd August 2012 ........page 6471

## 6. Business Purposes

1/ An insurer may carry on the business of insurance falling within the classes of insurance for which it is licensed, subject to any conditions or limitations on the license. Furthermore, with the prior approval of the National Bank, it may carry on any other activity ancillary to its business of insurance.

2/ An ancillary activity for an insurer licensed to carry on long term insurance business includes the following and similar activities:

a) providing investment consultancy and portfolio management services;

b) engaging in the provision of real estate brokerage services;

c) providing information processing services in Ethiopia to entities in which the insurance company has an influential interest;

d) providing support to insurance brokers and insurance agents in connection with the class of insurance carried on by the insurer;

e) acting as a custodian of property; and

f) issuing investment-insurance linkage products.

3/ An ancillary activity for an insurer licensed to carry on general insurance business includes the following and similar activities:

a) providing consultancy services in respect of risk management and claims adjustment in connection with the business of insurance carried on by the insurer;

b) providing information processing services to insurance brokers and insurance agents in connection with the business of insurance carried on by the insurer;

c) providing support to insurance brokers and insurance agents in connection with the class of insurance carried on by the insurer; and

d) operating motor vehicle repair and appraisal centers in connection with the business of insurance carried on by the insurer.

Federal Negarit Gazeta No. 57 22nd August 2012 ………page 6472

4/ With the prior approval in writing of the National Bank, an insurer licensed under this Proclamation to carry on long-term insurance business may carry on the activity of issuing investment-insurance linkage products.

5/ The manner of issuing investment-insurance linkage products and the need to establish segregated assets in respect thereof shall be prescribed by directive.

7. Commencement of Operation

A licensed insurer shall:

1/ put in place, before commencing operation, sound information management and internal control systems, risk management policies and procedures, and staffing requirements and such other requirements essential for running insurance business as prescribed by directive; and

2/ commence its operation within 12 months from the date of issuance of the license.

8. Renewal of License

The conditions for renewal of insurance business license may be determined by directive.

9. Publication of Licensed Insurers

The National Bank shall, in its annual report, publish the list of licensed insurers. It shall also promptly publish, in newspapers of wide circulation, any additions to or deletions from the said list.

10. Prohibitions

Foreign nationals or organizations fully or partially owned by foreign nationals may not be allowed to own insurance company or carry on insurance business or operate branch offices or subsidiaries of foreign insurers in Ethiopia or acquire the shares of Ethiopian insurers.

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Federal Negarit Gazeta No. 57 22nd August 2012 ………page 6473

PART THREE  
SHARES AND SHAREHOLDERS MEETINGS

11. Shares and Share Register

1/ Insurer’s shares shall be of one class and shall be registered as ordinary shares of same par value.

2/ Every insurer shall keep a register of shares as determined by the National Bank which shall show the names and voting rights of shareholders. Any transfer of shares, which is recorded in such register, shall be binding on both the transferor and transferee and provide conclusive evidence of the transaction and transfer of title.

3/ Any transfer of shares that is not recorded in the share register shall be null and void.

4/ Any transfer of shares that makes any person influential shareholder shall be approved by the National Bank before such transfer is recorded in the share register.

5/ The register maintained under sub-article (2) of this Article shall be kept open to the public for inspection, free of charge, at the insurer’s head office during its normal working hours.

12. Limitations on the Acquisition of Shares

1/ No person, other than the Federal Government of Ethiopia, may hold more than five percent of the total shares of an insurer, either on his own or jointly with his spouse or with persons who are below the age of 18 and related to him by consanguinity to the first degree.

2/ The number of shares that may be held in an insurance company by a company which is partially or fully owned by persons who have equity interest in that insurer shall be determined by directive.

3/ An influential shareholder of any insurer may not acquire shares in another insurer.

4/ No person may buy shares of an insurer using bank loans.

5/ Any person who does not fulfill the requirements set out under sub-article (1) or (3) of this Article on the effective date of this Proclamation shall comply with such requirements within a period of time to be prescribed by directive.

Federal Negarit Gazeta No. 57 22nd August 2012 ........page 6474

## 13. Shareholders Meetings

### 1/  
The National Bank may:  
a) assign observer to attend any general shareholders meeting of an insurer; b) call a general meeting of shareholders of an insurer to discuss and resolve any issue related to that insurer where it finds it to be in the interest of policyholders or shareholders, or to the stability and soundness of the insurance sector.

### 2/  
Where the National Bank calls a general shareholders meeting in accordance with sub-article (1)(b) of this Article:  
a) it shall prepare the agenda for the meeting; b) it may assign its officer or any other qualified person to preside over the meeting; c) the relevant provisions of the Commercial Code pertaining to quorum and resolutions of shareholders meetings of a share company shall be applicable; d) expenses incurred in relation to the meeting shall be borne by the concerned insurer.

## 14. Limitations on Voting Rights

### 1/  
The National Bank may restrict voting by proxy in any meeting of shareholders.

### 2/  
Where an influential shareholder of an insurer fails to fulfill the prescribed propriety criteria, the National Bank may restrict the voting rights of such person.

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## PART FOUR  
**DIRECTORS AND EMPLOYEES OF INSURERS**

## 15. Appointment of Directors and Officers

### 1/  
Without prejudice to sub-article (1) of Article 16 of this Proclamation, a director, chief executive officer or senior executive officer of an insurer shall be a person with honesty, integrity, diligence and reputation to the satisfaction of the National Bank.

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Federal Negarit Gazeta No. 57 22nd August 2012 ........page 6475

### 2/  
Appointment of any director, chief executive officer or senior executive officer of an insurer at the time of licensing or at any time thereafter may not be valid unless written approval is granted by the National Bank.

### 3/  
The term of office of outgoing directors of an insurer may not terminate until written approval for the incoming directors is granted by the National Bank.

### 4/  
The National Bank may issue directive on:  
a) qualification criteria to be fulfilled by directors, chief executive officer and senior executive officers of an insurer; b) the minimum number of directors who serve as member of the board of an insurer; c) the duties, responsibilities and good corporate governance of the directors of an insurance company; d) the maximum number of years a director may serve an insurer and the conditions for re-election of a director; e) the maximum remuneration of directors; and f) the maximum number of employees of an insurer who may sit on the board of the same insurer which employed them.

## 16. Prohibitions

### 1/  
No person who has been convicted of any offence involving breach of trust or fraud, whether in Ethiopia or elsewhere may be a director, chief executive officer or senior executive officer of an insurer.

### 2/  
No person who had been a director, chief executive officer or senior executive officer or otherwise directly or indirectly concerned in the management of any insurer that had been wound up, whether in Ethiopia or abroad, may, without prior written approval of the National Bank, act as a director, chief executive officer or senior executive officer, or otherwise directly participate in the management of an insurer.

Federal Negarit Gazeta No. 57 22nd August 2012........page 6476

3/ A director or chief executive officer of an insurer may not, at the same time, serve as a director of another financial institution. Moreover, a business entity or a company in which such director or chief executive officer has ten percent or more equity interest may not serve as a director of an insurer.

4/ An employee of an insurer may not be a chairperson of the board of directors of that insurer, or a director of another insurer.

17. Resignation of Insurers’ Management Functions

Any person who is a director or chief executive officer or senior executive officer or otherwise concerned, directly or indirectly, in the management of an insurer shall resign from such function if:

1/ he or the company in which he is a director or executive officer, has filed for bankruptcy or declared bankrupt, or his or the company’s assets have been sequestrated because of bankruptcy or his or the company’s assets have been foreclosed by a bank because of failure to repay a loan;

2/ he has been accused and found liable for default on repayments to creditors or owing to failure to pay taxes; or

3/ he fails to fulfill any of the qualification requirements set by the National Bank.

18. Suspension and Removal Measures by the National Bank

1/ The National Bank may, for sufficient cause, suspend or remove a director, a chief executive officer or a senior executive officer of an insurer.

2/ For the purpose of sub-article (1) of this Article, “sufficient cause” shall include the following:

a) failure to comply with the provisions of Article 16 or Article 17 of this Proclamation;

b) any action detrimental, in the opinion of the National Bank, to the stability or soundness of the financial sector, the economy, the general public or the insurer carried out by a director, a chief executive officer or senior executive officer of an insurer.

(Note: The left-hand column contains text in Amharic script. As per instructions, only the English content is transcribed. The Amharic text is omitted since it was not requested to be translated or included.)

የአማርኛ አደራጌ 126ት ጋዜጣ ቁጥር ሃሸ ነሐሴ 28 ቀን ጀሚሹ 4.ም Federal Negarit Gazeta No. 57 22nd August 2012 ………page 6477

### እ/ ብሓራዊ ባንክ የአንድን መድን ሰጪ ዳይረክተሮች ከሥራ በሚያስናብትበት ጊዜ የዳይረክተሮች ቁጥር በሕግ ከሚፈቀደው በርች ከሆነ ወዲያውኑ የቦርዴን ኃላፊነት ተረክቦ በሽ ቀናት ውስጥ የባለአክስዮኖች መቅላሳ በገለባ በመጥራት በተሰናበቱት ዳይረክተሮች ምትክ ምርጫ እንዲካሄድ ያደርጋል::

### ሀ/ ብሓራዊ ባንክ የአንድን መድን ሰጪ ዋና ሥራ አስፈጻሚ ወይም ከፍተኛ ሥራ አስፈጻሚ ከሥራ ያላናበተ እንደሆነ የመድን ሰጪው የዳይረክተሮች ቦርድ በመመሪያ የተወሰኑትን የብቃት መመዘኛዎች የሚያወግል ሰው ወዲያውኑ መተካት አለበት::

## ክፍል አምስት  
## የፋይናንስ ግዴታዎችና ገደብች

### ዘ. ተፈላጊውን ካፕታል ስለመያዝ

#### ሄ/ መድን ሰጪዎች መያዝ የሚገባቸው ገዥተኛ የካፕታል መጠን በመመሪያ ደወሰናል::

#### ሄ/ ብሓራዊ ባንክ የመድን ሰጪዎች አጠቃላይ የአደጋ ሥንት ተጋላጭነት መጠንን ግምት ውስጥ ያስገባ የተለያዩ የካፕታልና መመባብቂያ ህዳን የመያዝ ግዴታዎች ለተለያዩ መድን ሰጪዎች ሊያስቀምጥ ይችላል::

#### ሄ/ ብሓራዊ ባንክ የማናቸውም መድን ሰጪ ካፕታልና መመባብቂያ ህዳን ከተወሰነው ገዥተኛ መጠን በታች ነው፣ ብሎ ሲያምን መድን ሰጪው በተወሰነ ጊዜ ውስጥ ሁኔታውን ለማስተካከል የሚያስችል እርምጃዎች እንዲወስድ ትዕዛዝ ሊጥጥ ይችላል::

### ሸ. ሕጋዊ ተቀማጭ ገንዘብ

#### ሄ/ ማንኛውም መድን ሰጪ ለሚያካሄደው ለእያንዳንዱ አብይ የመድን ሥራ ዓይነት መጠኑ በመመሪያ የሚመሠን ህጋዊ ተቀማጭ ገንዘብ በጥራ ገንዘብ ወይም በመንግሥት የግዴታ ሰነድ በብሓራዊ ባንክ ማስቀመጥ አለበት::

#### ሄ/ ለዚህ እንቀጽ ንዑስ እንቀጽ (ሄ) የተወሰነው ተቀማጭ ገንዘብ በመድን ሰጪው ስም የሚያገዝ ሆኖ የመድን ሰጪው ሃብት እንደሆነ ይቆጥራል፤ ሆኖም ተቀማጭ ገንዘብ በመ-ሉም ሆነ በከፊል ብሓራዊ ባንክ በዕሉፍ ካለፈቀደ በቀር ወጪ ሲደረግ ወይም ለማንኛውም ብድር መያዝ ወይም ዋስትና ሊሆን አይችልም::

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3/ Where the National Bank removes directors of an insurer and, as a result of the removal, the number of directors falls below the minimum prescribed by law, the National Bank shall immediately assume the powers of the board of directors and shall, within 30 days, call a meeting of shareholders to replace the removed directors.

4/ Where the National Bank removes the chief executive officer or senior executive officer of an insurer, the board of directors of the insurer shall fill the vacant post immediately with a person who fulfills the qualification criteria set by directive.

## PART FIVE  
## FINANCIAL REQUIREMENTS AND LIMITATIONS

### 19. Maintenance of Required Capital

1/ The minimum amount of capital to be maintained by insurers shall be prescribed by directive.

2/ The National Bank may prescribe different capital and reserve requirements to be maintained by different insurers depending on their risk profile.

3/ Where the National Bank determines that the capital and reserve of an insurer is below the prescribed minimum, it may require the insurer to take, within a specified period of time, measures necessary to rectify the situation.

### 20. Statutory Deposit

1/ Every insurer shall, in respect of each main class of insurance business it carries on, deposit with the National Bank an amount, as may be prescribed by directive, in cash or government securities.

2/ The deposit prescribed under sub-article (1) of this Article shall be deemed to be part of the assets of the insurer and shall be held to the credit of the insurer; provided, however, that the deposit or any part thereof may not be withdrawn except with the written permission of the National Bank, or be used as a pledge or security for any loan.

የአማርኛ አደራጌ 126ት ጋዜጣ ቁጥር 57 ካልሐ 28 ቀን ደበዳ 9.ም Federal Negarit Gazeta No. 57 22nd August 2012 ………page 6478

### እ/ በዚህ አንቀጽ ንዑስ አንቀጽ (፩) መሠረት ተቀማዊ ከሆነው ገንዘብ ውስጥ ማንኛውም ክፍል የመድገ ሰጪውን ግዴታ ለመፈፀም የዋለ እንደሆነ ጉድለቱን ለማያጋላት የሚያስፈልገውን ተጨማሪ ገንዘብ መድገ ሰጪው ተቀማዊ ገንዘቡ ወይም ከተቀማዊ ገንዘቡ ውስጥ ማንኛውም ክፍል ግዴታውን ለመፈፀም ከዋለበት ቀን ጀምሮ በአንድ ወር ጊዜ ውስጥ በግራ ገንዘብ ወይም በመንግሥት የግዴታ ሰነድ ማስቀመጥ አለበት።

### ፅ/ በዚህ አዋጅ አንቀጽ ጽፎ ንዑስ አንቀጽ (፩) እና (፪) የተጠቀሰትን ግዴታቸው ለመፈፀም ካልሆነ በቀር ተቀማጩ ገንዘብ ወይም ከተቀማጩ ገንዘብ ማናቸውንም ክፍል በዚህ አንቀጽ ንዑስ አንቀጽ (፫) በተመለከተው አካሂዱን እንዲወል አይፈቀድም።

## ዲ፷. ሕጋዊ ተቀማዊ ገንዘብ አጠቃቀም ላይ የተጣሉ ገደቦች

### ድ/ በዚህ አዋጅ አንቀጽ ጽ በተመለከተው መሠረት ተቀማዊ የሆነ ገንዘብ በመድገ ውሎች መድገ ሰጪው ከገባቸው የገንዘብ ግዴታቸው ውስጥ ሳይፈጸሙ የቀሩትን ለመፈፀም ካልሆነ በቀር የመድገ ሰጪውን ማንኛውንም ሌላ ግዴታ ለማስፈፀምያ ለመደብ ወይም ወጪ ሌሆን አይችልም። እንዲሁም መድገ ገቢው በመደብ ውል መሠረት ከመድገ ሰጪው ለኪራለው በአማጫ ዕዲ የተሰጠን ውሣኔ ለማስፈፀም ካልሆነ በቀር ማንኛውንም ሌላ የፍርድ ቦት ውሣኔ ለማስፈፀም ሊውል አይችልም።

### ደ/ ለእያንዳንዱ አብይ የመድገ ሥራ ዓይነት ተቀማዊ የሆነ ገንዘብ በዚያው አብይ የመድገ ሥራ በተፈፀሙ የመድገ ውሎች ምክንያት ለሚመጣ ግዴታ ካልሆነ በቀር ማንኛውንም ግዴታ ለመፈፀም ሊውል አይችልም።

## ዲ፸. ሕጋዊ የመጠባበቂያ ሂሳብ ስለመያዝ

### ድ/ ማንኛውም መድገ ሰጪ በሃሳብ ዓመቱ መጨረሻ ከገንዘቡ የተጣራ ትርፍ ከአሥር በመቶ የሚያንሰውን ወደ ሕጋዊ መጠባበቂያ ሂሳቡ ገቢ ማድረግ አለበት።

### ደ/ የዚህ አንቀጽ ንዑስ አንቀጽ (፩) ድንጋጌ በኖርም መጠባበቂያ ሂሳቡ ከመድገ ሰጪው የተከፈለ ነገርታል ጋር እኩል ሊሆን በዋጋውት ወደ መጠባበቂያው ሂሳብ ገቢ የሚደረገው የተጣራ ትርፍ መጠን በመመሪያ ይወሰናል።

### የ/ ሕጋዊ የመጠባበቂያ ሂሳብ ለቁንስ የሚችልበት ሁኔታ በመመሪያ ይወሰናል።

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3/ If any part of a deposit made under sub-article (1) of this Article is used in the discharge of any liability of the insurer, the insurer shall deposit such additional amount in cash or government securities to cover the deficit within a period of one month from the date of such use of the deposit or any part thereof.

4/ The use of the deposit or any part thereof as is referred to in sub-article (3) of this Article may not be permitted except for the discharge of liabilities referred to in sub-article (1) and (2) of Article 21 of this Proclamation.

## 21. Restrictions on the Use of Statutory Deposit

1/ The deposit specified under Article 20 of this Proclamation may not be assigned or used for the discharge of any liability of the insurer other than outstanding liabilities arising out of insurance policies issued by the insurer. Such deposit may also not be liable to attachment in the execution of any court decree except a decree obtained by a policyholder on the insurer in respect of a debt due upon a policy.

2/ The deposit in respect of each main class of insurance business may not be used for the discharge of any liability of the insurer other than liabilities arising out of policies of the same main class of insurance issued by the insurer.

## 22. Maintenance of Legal Reserve

1/ Any insurer shall, at the end of each financial year, transfer to its legal reserve account a sum of not less than ten percent of its net profit.

2/ Notwithstanding the provisions of sub-article (1) of this Article, when the legal reserve becomes equal to the paid up capital of the insurer, the amount of legal reserve to be retained by the insurer each year from its net profit shall be determined by directive.

3/ The circumstances under which the legal reserve account may be reduced shall be determined by directive.

Federal Negarit Gazeta No. 57 22nd August 2012 ........page 6479

## 23. Margin of Solvency

1/ An insurer shall, at all times and in compliance with directive to be issued, maintain:

a) adequate level of capital reserve and margin of solvency; and

b) adequate and appropriate forms of liquidity.

2/ If an insurer could not comply with the provision of directive as to the amount of asset required for margin of solvency, it may not declare, credit the account of, or pay to shareholders any dividend until all impairments on margin of solvency, as determined by the National Bank, have been removed.

3/ The manner of computing amounts of admitted assets and admitted liabilities for margin of solvency requirement shall be prescribed by directive.

## 24. Technical Provisions, Depreciation and Amortization.

1/ Every insurer shall maintain technical provisions.

2/ The amount of provisions to be set aside pursuant to sub-article (1) of this Article and the manner of calculating the provisions shall be prescribed by directive.

3/ In the case of an insurer licensed to carry on long-term insurance business, the liabilities shown in the annual return shall include as a provision the value of the actuarial and policy liabilities and other related matters as may be specified in the actuarial valuation.

4/ The long-term insurance technical provision may not be less than the total liabilities under the long-term insurance policies.

5/ Every insurer shall:

a) depreciate its assets and amortize its capitalized expenditure in accordance with the relevant laws;

b) fully recover its operating and accumulated losses from its annual net profit. No dividend may be paid to shareholders until such losses are fully recovered.

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Federal Negarit Gazeta No. 57 22nd August 2012 ........page 6480

6/ The National Bank shall take into account the adequacy of the provisions, depreciations of fixed assets and amortization stated under sub-article (1), (3) and (5)(a) of this Article, and make the necessary adjustments, in making the calculations necessary to ascertain that an insurer is complying with the provisions concerning capital and margin of solvency requirements.

7/ Every insurer shall maintain a special reserve account or purchase insurance or reinsurance protection that is, in the opinion of the National Bank, adequate and earmarked exclusively for:

a) the purpose of making good any loss resulting from the negligence or dishonesty of any director or employee of the insurer; and

b) any losses caused by unexpected or catastrophic occurrences.

## 25. Overall Investment Policy

1/ The National Bank may issue directive prescribing investment of insurers.

2/ Every insurer shall develop and adhere to an investment policy that:

a) a reasonable and prudent person would apply in respect of a portfolio of investments to avoid undue risk of loss and to obtain a reasonable return;

b) appropriately reflects its liability structure; and

c) complies with the requirements of relevant directives issued hereunder.

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## PART SIX  
FINANCIAL REPORTS, EXTERNAL AUDIT AND ACTUARIAL INVESTIGATION

## 26. Financial Report

1/ The National Bank may direct insurers to prepare financial reports in accordance with international financial reporting standards, regardless of the change in their designations or their replacement, from time to time.

Federal Negarit Gazeta No. 57 22nd August 2012 ........page 6481

## 2/ Every insurer shall keep such records as are necessary to:

a) exhibit clearly and correctly the state of its affairs;

b) explain its transactions, financial position and conditions; and

c) enable the National Bank to determine whether the insurer had complied with the provisions of this Proclamation and regulations and directives issued hereunder.

## 3/ Every insurer shall register and keep documents for each type of transaction. The types of financial statements, required entries of such documents and the formats may be prescribed by directive.

## 27. Separation of Accounts

### 1/ Where an insurer carries on both long-term and general insurance business:

a) it shall keep a separate account of all the income and expenditure in respect of each main class of insurance business;

b) it shall establish and maintain for each main class of insurance business a separate technical provisions with the appropriate name;

c) the long-term insurance technical provisions:

(1) shall exclusively be to the security of the long-term insurance policyholders as though such technical provisions belonged to an insurer carrying on no insurance business other than long-term insurance business;

(2) may not be used by the insurer to cover liability arisen from other contract;

(3) may not be liable to attachment in the execution of any decree of a court except a decree obtained by a long-term insurance policyholder of an insurer in respect of a debt due upon a policy which the policyholder has failed to realize in any other way.