Dividend Policy Case Study Of Private Insurances In Ethiopia

The objective of this study is first, to explain how different dividend policies arernpracticed by insurance companies, second what factors are influential to determine thernamount of dividend payment, and third how the aforementioned policies and factorsrnaffect the price of the share, if any. A case of descriptive research method has beenrnemployed on four private insurance companies namely, Nile Insurance Company, AwashrnInsurance Company, Africa Insurance Company and Global Insurance Company from thernyear 1999 to 2003. Insurances have used any arbitrary percentage of paid up capital as arndividend policy which is different from the common dividend policies. This arbitraryrnpercentage as a dividend policy is not influential to estimate the amount of dividendrnpayments in the future because of no consistency. Legal restrictions, liquidity position,rnnet annual profit, shareholders preferences, growth prospects and taxes are factors whichrnare commonly used to determine the amount of dividend payments. The paper concludesrnthat all insuranc.es · hav~ not prac~iced relevant divided policy though the above factorsrnhave c:lused partly to increase and partly to decrease to determine the amount of dividendrnpaym ~nts . . Finally, regardless of any decision in this ~espect, the price of the sharernremains the same.

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