A Report On Performance Of The Insurance Company In Bangladesh

The Performance of Insurance Companies Listed in Dhaka Stock
Exchange
SUBMITTED TO:

2
Md. Bokhtiar Hasan
Lecturer
Department of Finance and Banking
Faculty of Business Administration
Islamic University, kushtia
Date of Submission: 17th
September, 2014
Submitted By:
Group-C (Bearing Roll.No. 1021021-1021030)
NAME ROLL NO. REG. NO.
ORIN OSMAN ORIN 1021021 1488
MD. DELOWAR HOSSAIN 1021022 1489
MOHAMMAD ALI 1021023 1490

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MD. MORSHEDUL HAQUE 1021024 1491
MD. NASIM REZA 1021025 1492
MD. RABIUL ISLAM 1021026 1493
NAZMUL HOSSAIN 1021027 1494
MD. ASADUL ISLAM 1021028 1495
SHARUZZMAN 1021029 1496
SHAMIM RAHAMAN 1021030 1497
Session: 2010-2011
Islamic University, Kushtia.

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Letter of Transmittal
17th
September, 2014
Md. Bokhtiar Hasan
Lecturer
Islamic University, kushtia
Subject: Submission of Report
Sir
With due respect, we would like to inform you that, it is a great pleasure for us to submit the report on ―The performance of Insurance
Companies Listed in Dhaka Stock Exchange” .We have tried to make the report a comprehensive one within the given time. We earnestly
thank you for your guidance during the preparation of the report. Any sort of suggestion regarding the report will be greatly acknowledged and
we will be gratified if our report serves its purpose.
We, therefore, request you to accept this report and give our proper suggestion to work in my professional life and we pray and hope that the
mistakes, the report may have will be kindly excused.
Lastly, I beg your kind consideration for evaluating this report.
Yours faithfully
Group-C
Islamic University, Kushtia.

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Acknowledgement
Our endeavor will come true if the actual purpose of this report becomes fulfilled. First of all we would like to express our gratitude to almighty
Allah. Then we would like to special thank to our honorable course instructor, Mr. Bokhtiar Hasan, Lecturer, Department of Finance and
Banking, Islamic University, Kushtia, for assigning us such type of challenging task and guiding and instructing us continuously to complete the
task. We cordially remember Dhaka Stock Exchange authority providing us necessary data to prepare the report.
Finally, we would like to thank our signor batch students and all other person whose influence and inspiration has enabled us to complete this
report.

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TABLE OF CONTENT
Part-1: Introductory Part

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1.1. Introduction
Part-2: Types of Insurance in Context of Bangladesh and World
2.1.1 Property Insurance
2.1.2. Life Assurance
2.1.3. Marine and Aviation insurance
2.1.4. Pecuniary Insurance
2.1.5. Motor Insurance
2.1.6. Liability Insurance
2.1.7. Health and Protection Insurance
2.2. Objective of the Report
2.3. Literature Review
2.4 Methodology
Part-3: Evaluating the Performance of General Insurance Companies Through Ratio Analyses
3.1. Profitability Ratios
3.1.1. Net profitability Ratio

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3.1.2. Return On Assets (ROA)
3.1.3. Return On Equity (ROE)
3.1.4. Earnings Per Share (EPS)
3.1.5. Investment Turnover
3.2. Liquidity Ratios
3.2.1. Current Ratio
3.2.2. Quick Ratio
3.2.3 Cash Turnover
3.3. Leverage Ratios
3.3.1. Debt Ratio
3.3.2. Debt to total Assets Ratio
Appendix: All calculation

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Executive Summary
This report is based on financial statements of 2009, 2010, 2011 2012 and 2013 of General Insurance Company Limited listed in DSE. It was a great
opportunity to experience and gather knowledge different types of insurance operations. Our faculty supervisor helped us to choose the topic-
―Financial Performance Analysis of general Insurance Company Limited‖.

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In the new competitive business era, Insurance sector is getting more competitive in Bangladesh. In this sector the most used financial statements are
the balance sheet and profit and loss account where the balance sheet shows the financial position and profit and loss account shows the net profit or
net loss of an insurance company. Ratio Analysis deals with these statements
In this report, ―The Performance of this industry are done through ratio analysis of 4 different companies
of general Insurance listed in DSE from the 35 companies.‖ That are
 Eastland Insurance co. Ltd.
 Global Insurance Co. Ltd
 Federal Insurance co. Ltd
 Green Delta Insurance Company Limited
By doing industry analysis one can easily compare the financial performance of the companies. Ratio analysis helps a company to take necessary steps
regarding the conditions, finding the loop holes of the company and then the necessary steps can be taken to prevent the condition. Then the stock
valuation is done with the help of market information and then found out whether the stock price of company is undervalued or overvalued and found
out the probable reasons of specific condition
Furthermore, the overall condition, problems, prospects and the recommendations of insurance companies or insurance sector have been discussed
considering the four industries.
Then, the recommendations for the general insurance company have been found out so that it can take a look of those and develop its condition to
develop it existence in the insurance industry.
At the end, it can be said that general insurance companies are the leading non-life insurance companies in the insurance industry. They have own
reputation and market. For sustaining in the insurance industry it needs to compete with other companies. For that reason it should focus on the
innovation and development by competing itself so that it can uplift its own standard from the previous standard.
Part 1: Introductory Part

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1.1 Introduction
Insurance is a system of spreading the risk of one to the shoulders of many. It is a contract whereby the insurers, on receipt of a consideration
known as premium, agree to indemnify the insured against losses arising out of certain specified unforeseen contingencies or perils insured
against.
Insurance is not a new business in Bangladesh. Almost a century back, during British rule in India, some insurance companies started transacting
business, both life and general, in Bengal. Insurance business gained momentum in East Pakistan during 1947-1971, when 49 insurance
companies transacted both life and general insurance schemes. These companies were of various origins British, Australian, Indian, West
Pakistani and local.10 insurance companies had their head offices in East Pakistan, 27 in West Pakistan, and the rest elsewhere in the world.
These were mostly limited liability companies. Some of these companies were specialized in dealing in a particular class of business, while
others were composite companies that dealt in more than one class of business.
After the emergence of the People’s Republic of Bangladesh in 1971, the government, in order to make available the fruit of liberation to
the general mass, nationalized the insurance industry along with the banks in 1972 by Presidential Order No. 95. By virtue
of this order, save and accept postal life insurance and foreign life insurance companies (ot her than the Pakistani
companies), all companies and organization transacting all types of insurance business in Bangladesh came under
this nationalization order. At the same time, five insurance corporations were initially established by the Government;
 Jatiya Bima Corporation (National Insurance Corporation),
 Teesta Bima Corporation (Teesta Insurance Corporation)
1

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 Karnaphuli Bima Corporation (Karnaphuli Insurance Corporation),
 Rupsa Jiban Bima Corporation (Rupsa Life Insurance Corporation),
 Surma Jiban Bima Corporation (Surma Life Insurance Corporation).
On 14th May, 1973 the Insurance Corporation Act VI, 1973 was enacted under which the previous five corporations
were abolished and the following two corporations emerged:
 Sadharan Bima Corporation for General Insurance
 JibonBima Corporation for Life Insurance
The basic idea behind the formation of four underwriting corporations, two in each main branch of life and general, was to encourage
competition even under a nationalized system. But the burden of administrative expenses incurred in maintaining two corporations in each front
of life and general and an apex institution at the top outweighed the advantages of limited competition. Consequently, on 14 May 1973, a
restructuring was made under the Insurance Corporations Act 1973. Following the Act, in place of five corporations the government formed two:
the SadharanBima Corporation for general business, and JibanBima Corporation for life business.
After 1973, general insurance business became the sole responsibility of the SadharanBima Corporation. Life insurance business was carried out
by the JibanBima Corporation, the American Life insurance Company, and the Postal Life Insurance Department until 1994, when a change was
made in the structural arrangement to keep pace with the new economic trend of liberalization.
The Insurance Corporations Act 1973 was amended in 1984 to allow insurance companies in the private sector to operate side by side with
SadharanBima Corporation and JibanBima Corporation. The Insurance Corporations Amendment Act 1984 allowed floating of insurance
companies, both life and general, in the private sector subject to certain restrictions regarding business operations and reinsurance. Under the
new act, all general insurance businesses emanating from the public sector were reserved for the state owned SadharanBima Corporation, which
could also underwrite insurance business emanating from the private sector. The Act of 1984 made it a requirement for the private sector
insurance companies to obtain 100% reinsurance protection from the SadharanBima Corporation. This virtually turned SadharanBima
Corporation into a reinsurance organization, in addition to its usual activities as direct insurer. Sadharan Bima Corporation itself had the right to
1

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reinsure its surplus elsewhere outside the country but only after exhausting the retention capacity of the domestic market. Such restrictions aimed
at preventing outflow of foreign exchange in the shape of reinsurance premium and developing a reinsurance market within Bangladesh.
The control over insurance companies including their functions relating to investments, taxation and reporting is regulated mainly by the Insurance Act
1938 and the Finance Acts.
Part-2:Types of Insurance in Context of Bangladesh and World
Private individuals and businesses need different types of 'general insurance', so we can split general insurance into two areas. One: personal
insurances (or 'personal lines') where the policyholder is a private individual. And two: commercial insurances (or 'commercial lines') where the
policyholder is a firm or some other kind of organization. Within general insurance there are a number of different categories.
2.1.1. Property insurance
Property insurance includes a range of covers, which may be needed by businesses to protect their physical property, such as buildings,
machinery and stock. Private individuals need property insurance too, but this is typically provided in a home insurance policy.
2.1.2. Life assurance
A life assurance (or insurance) policy pays a specified sum if the person assured (or insured) dies, or if they survive a given term of years.

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2.1.3. Marine and aviation insurance
Marine policies cover the property or 'interest' insured against perils of the sea such as bad weather, stranding, collision, fire and seizure, while
aviation insurance covers damage on the ground or in the air, and liabilities for cargo and passengers.
2.1.4. Pecuniary insurance
'Pecuniary' means relating to money and pecuniary insurance covers businesses against purely financial losses (e.g. from fraud, legal expenses or
business interruption) rather than physical damage to property
2.1.5. Motor insurance
Available for private cars, motorcycles, commercial vehicles and fleet insurance. Motor is one of the compulsory insurance classes and anyone
using a motor vehicle on the public highway must have it
2.1.6. Liability insurance
We all have a legal duty to behave reasonably to others. If we injure someone or damage their property through negligence, we are legally
obliged to pay compensation. Liability insurance is there to insure individuals and businesses against this risk.
2.1.7. Health and protection insurance
Personal accident and sickness cover pays out in the event of death, permanent disablement or loss of eyes or limbs due to accident or if the
insured is unable to work due to accident (or sickness). Private Medical insurance(PMI) pays for inpatient and outpatient treatment outside the
NHS. Creditor insurance covers credit repayments (e.g. on mortgage and credit card loans) in the event of unemployment, accident or sickness.

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2.2. Objective of the Report
The key objectives of preparing the report is to take snapshot of present and past conditions of general insurance companies listed Dhaka Stock
Exchange and visualize the future of this industry considering present and future trends. problems and prospects of the General insurance
company in Bangladesh. The other objectives of this study are to identify the strength and weakness of this industry some suggestions to
overcome the problems identified so as to ensure smooth functioning and growth of insurance. To know about the best practices of insurance of
Bangladesh is also another objective of this study.
2.3. Literature Review
Wood and Wilkinson (1985) analyzed the disclosure practices of general insurance companies of U.K. Findings show that the financial
statements of general insurance companies are heavily dependent on estimates. There were inconsistencies in the accounting of different
companies. They suggested that there is an urgent need for a recognized standard of general insurance company’s accounting. They pointed to a
Statement of Recommended Practice (SORP) developed by experts within the industry, which will focus on the methods of accounting for
different aspects of general insurance business.
Cummins and Weiss (1993) investigate the efficiency of PC insurers by estimating stochastic cost frontiers for three size-stratified samples of
property-liability insurers over the period 1980–1988. A transom cost function and input share equations are estimated using maximum

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likelihood techniques. The results show that large insurers operate in a narrow range around an average efficiency level of about 90 percent
relative to their cost frontier. Efficiency levels for medium and small insurers are about 80 and 88 percent in relation to their respective frontiers.
Wider variations in efficiency are present for these two groups in comparison with large insurers. Large insurers slightly over-produce loss
settlement services, while small and medium-size insurers under-produce this output. The small and intermediate size groups are characterized
by economies of scale, suggesting the potential for cost reductions from consolidations in the industry.
Joshi (2004) stated that though the basic accounting principles are same for accounting of general insurance business, there are certain
intricacies in accounting of various general insurance transactions. The study is focused on legal norms with regard to accounts and audit. Study
revealed that every insurer carrying on general insurance business has to comply with the requirements of schedule B - which is divided into five
parts. Study also discussed about organization structure, accounting of commission, claim accounting, expenses of management, co-insurance
and consolidation of the accounts of an insurance company having number of offices in India and abroad
Riaz et al (2006) analyzed the annual reports of 10 insurance companies listed on the Dhaka Stock Exchange (DSE), selected on random basis
for 2001 and 2004. Findings of the study showed that insurance companies do not comply with all the mandatory requirements in the annual
reports. Also they did not disclose adequate voluntary disclosure in their annual reports. There was improvement in the reporting practices over
time because of increasing awareness of corporate governance. Insurance companies lag behind the banking companies in compliance with
disclosure due to lack of proper regulations in this sector.
Chen, Yao, and Yu (2007) find that active equity mutual funds managed by insurance companies
Underperform peer funds by over 1% per year. The lower returns of insurance funds are not due to less risky investments; instead insurance
funds have lower risk-adjusted returns, and their fund flows are less sensitive to performance when they perform poorly. Across insurance funds,
those with heavy advertising, directly established by insurers, using parent firms’ brand names, or whose managers simultaneously manage
substantial non-mutual-fund assets, are more likely to underperform. The authors conclude that insurers’ efforts to cross-sell mutual funds
aggravate agency problems that erode fund performance
2.4. Methodology

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In order to generate this report only secondary data has been used. The source that have been used to gather and collect data is given below-
i. Annual Report (2009-2013) of Eastland Insurance co. Ltd. Global Insurance Co. Ltd, Federal Insurance co. Ltd, and Green
Delta Insurance Company Limited
ii. Website of Dhaka Stock Exchange (DSE) and Bangladesh Securities and Exchange Commission(BSEC)
iii. Newspaper of the Trade and Business.
iv. Website of the Eastland Insurance co. Ltd. Global Insurance Co. Ltd, Federal Insurance co. Ltd, and Green Delta Insurance
Company Limited
Part-3: Evaluating The Performance of General Insurance Companies Through
Ratio Analysis
3.1. Profitability Ratio
Profitability ratios provide information about management's performance in using the resources of the business. Many entrepreneurs decide to
start their own businesses in order to earn a better return on their money than would be available through a bank or other low-risk investments. it
is important to note that many factors can influence profitability ratios, including changes in price, volume, or expenses, as well as the purchase
of assets or the borrowing of money

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3.1.1. Net profitability Ratio:
It measures the overall profitability of the company, or how much is being brought to the bottom line. In general terms, net profitability shows the
effectiveness of management. Though the optimal level depends on the type of business, the ratios can be compared for firms in the same industry.
Formula: Net Profitability =
Net Income
Net Sales
Company Name 2009 2010 2011 2012 2013 Average
Eastland Insurance Co. Ltd 41% 57% 65% 44% 53% 52%
Global Insurance Co. Ltd 24% 19% 20% 23% 24% 22%
Federal Insurance Co. Ltd 8% 8% 19% 22% 22% 16%
Green Delta Insurance Co.
Ltd 32% 62% 16% 20% 17% 29%

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Findings
From 2009 to 2010 and 2011 , the trend of net profitability of Estland Insurance co. Ltd had an increasing but after 2011 the trend is slightly
decreasing and in 2013 the trend is slightly increasing. From 2012 to 20113 it had an increasing trend it was a well sign for Estland Insurance
co. Ltd because compared to Global Insurance co. Ltd the condition was not good. However, the performance of Reliance was far better than
Federal Insurance co. Ltd if we consider the consistency and the higher profitability. On the other hand, the condition of Green Delta insurance
co. Ltd was good at all as compare net profitability ratio than other two companies. In 2013 the performance of Federal Insurance co. Ltd and
Global Insurance co. Ltd was better in consideration of net profitability than Green Delta insurance co. Ltd . In 2009 and 2010 the performance
of was Green Delta insurance co. Ltd good and of Estland Insurance co. Ltd very good.
0%
10%
20%
30%
40%
50%
60%
70%
2009 2010 2011 2012 2013
Eastland Insurance Co. Ltd
Global Insurance Co. Ltd
Federal Insurance Co. Ltd
Green Delta Insurance Co. Ltd

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Recommendation:
After considering the scenario it could be recommended that Green Delta insurance co. Ltd has some problems with its indirect operating expenses
or non-operating items, such as interest expense so it should be focused on it for the sake of effectiveness of the company.
3.1.2. Return on assets:
Return on assets indicates how effectively the company is deploying its assets. A very low return on asset, or ROA, usually indicates inefficient
management, whereas a high ROA means efficient management. However, this ratio can be distorted by depreciation or any unusual expenses. ROA
tells you what earnings were generated from invested capital (assets). ROA for public companies can vary substantially and will be highly dependent
on the industry. This is why when using ROA as a comparative measure, it is best to compare it against a company's previous ROA Numbers or the
ROA of a similar company. The ROA figure gives investors an idea of how effectively the company is converting the money it has to invest into net
income. The higher the ROA number, the better, because the company is earning more money on less investment
Formula: Return on assets =
Net Income
Total Assets
2009 2010 2011 2012 2013 Average
Eastland Insurance Co. Ltd 9.4% 14.0% 15.0% 9.9% 11.7% 12.0%
Global Insurance Co. Ltd 6.5% 4.7% 4.5% 5.5% 5.0% 5.2%
Federal Insurance Co. Ltd 2.2% 2.3% 3.9% 5.0% 5.0% 3.7%
Ltd 6.8% 10.1% 3.0% 4.3% 3.6% 5.6%

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Findings
From year 2009 to 2010 Green Delta insurance co. Ltd and Eastland Insurance co. Ltd has an increasing trend of ROA whereas Global Insurance
co. Ltd has a decreasing trend of ROA. In five years Eastland Insurance co. Ltd has higher ROA than other three companies. However the Federal
Insurance co. Ltd has an increasing trend from 2009 to 2012 and slightly decrease in 2013 where the Green Delta insurance co. Ltd is an decreasing
compare with 2009 and 2010.So Eastland Insurance co. Ltd and Green Delta insurance co. Ltd have higher ROA than two other companies.
Recommendation:
For being efficient Eastland Insurance co. Ltd company should avoid depreciations and unusual expenses for getting higher ROA to improve the
condition of company.
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
14.0%
16.0%
2009 2010 2011 2012 2013
Return on Assets
Ltd

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3.1.3. Return On Equity (ROE):
It indicates how well the company is utilizing its equity investment. Due to leverage, this measure will generally be higher than return on assets. ROI
is considered to be one of the best indicators of profitability. It is also a good figure to compare against competitors or an industry average. Experts
suggest that companies usually need at least 10-14 percent ROI in order to fund future growth. If this ratio is too low, it can indicate poor
management performance or a highly conservative business approach. On the other hand, a high ROI can mean that management is doing a good
job, or that the firm is undercapitalized
Formula: Return on Equity (ROE) =
Net Income
Owner ′ s Equity
2009 2010 2011 2012 2013 Average
Esland Insurance Co. Ltd 16.9% 22.7% 22.5% 17.4% 18.5% 19.6%
Ltd 10.9% 15.3% 5.3% 6.2% 5.2% 8.6%

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Findings
From year 2009 to 2011, Eastland Insurance co. Ltd had an increasing rate of return on investment; in 2010 and 201,1 it was very tremendous.
Green Delta insurance co. Ltd also had an increasing figure 2009 and 2010. On the other hand, Global Insurance co. Ltd and the Federal Insurance
co. Ltd faced a situation that their variation is not so far for their return. However Green Delta insurance co. Ltd is in a decreasing situation in
2011, 2012 and 2013.
Recommendation:
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
2009 2010 2011 2012 2013
Return On Equity
Esland Insurance Co. Ltd
Green Delta Insurance
Co. Ltd

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So, it can be said that. From 2009 to 2011 has a growing rate of Eastland Insurance co. Ltd and good ROE also two next year but still it need to be
improved for the other three companies because high ROI means good management of the company. Here, the return on the investment is not up to
the mark so it should be increased.
3.1.4. Earnings per share:
EPS states a corporation's profits on a per-share basis . EPS is the portio of the o pa y’s distri uta le profit hi h is allo ated to ea h outsta di g
equity share (common share). EPS is a very good indicator of the profitability of any organization, and it is one of the most widely used measures of
profitability. The higher the EPS figure, the better it is. A higher EPS is the sign of higher earnings, strong financial position and, therefore, a reliable
company to invest money. A consistent improvement in the EPS figure year after year is the indication of continuous improvement in the earning
power of the company.
Formula: Earnings per share (EPS) =
Net Income
No.Share outstanding
Company name 2009 2010 2011 2012 2013 Average
Eastland Insurance Co. Ltd 0.42 0.56 0.52 0.41 0.41 0.46
Global Insurance Co. Ltd 13.64 11.11 1.02 1.44 1.33 5.71
Federal Insurance Co. Ltd 12.95 1.32 1.03 1.23 1.21 3.55
Co. Ltd 5.70 11.73 3.28 4.66 3.59 5.79

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Findings
In 2009 EPS is higher for three companies except Eastland Insurance co. Ltd but in 2010 the EPS of the Federal Insurance co. Ltd is low than
2009.After that Green Delta insurance co. Ltd has higher EPS than other three companies though these are lower than previous years. Federal
Insurance co. Ltd and Global Insurance co. Ltd have poor EPS in 2011,2012 and 2013 but higher than Eastland Insurance co. Ltd .So on the
average of EPS ,Green Delta insurance co. Ltd and Federal Insurance co. Ltd is good.
Recommendation:
0.00
2.00
4.00
6.00
8.00
10.00
12.00
14.00
16.00
2009 2010 2011 2012 2013

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For getting higher EPS, Green Delta insurance co. Ltd and Federal Insurance co. Ltd is good, should focused on the issues by which they can
increase their net income. They can increase it by reducing their cost and increase their revenues. Also they can take steps to reduce their tax
payment. Higher the EPS means the condition of that company is better.
3.1.5. Investment turnover:
It measures a company's ability to use assets to generate sales. Although the ideal level for this ratio varies greatly, a very low figure may mean that
the company maintains too many assets or has not deployed its assets well, whereas a high figure means that the assets have been used to produce
good sales numbers.
Formula: Investment turnover=
Net Sales
Total Assets
2009 2010 2011 2012 2013 Average
Eastland Insurance Co. Ltd 23.0% 24.6% 23.1% 22.4% 22.1% 23.0%
Ltd 21.2% 16.2% 19.3% 21.7% 20.9% 19.9%

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Findings
In 2009, investment turnover of Global Insurance co. Ltd and Federal Insurance co. Ltd very good where Eastland Insurance co. Ltd and Green
Delta insurance co. Ltd are also good but slightly lower. In 2011, three company’s turnover was becoming lower except Green Delta insurance
co. Ltd and its investment turnover was growing higher for next two years.
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
2009 2010 2011 2012 2013
Investment Turnover

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Recommendation:
So on the basis of average result, we can recommend that Green Delta insurance co. Ltd should utilize its total assets in order to increasing it sales.
It should be focused on that whether it is using more assets than it is actually needed. If doing so, it should take steps to reducing its use of assets
less to produce high amount of sales
3.2. Liquidity Ratios:
Liquidity ratios demonstrate a company's ability to pay its current obligations. In other words, they relate to the availability of cash and other assets
to cover accounts payable, short-term debt, and other liabilities. In mature companies, low levels of liquidity can indicate poor management or a
need for additional capital. Any company's liquidity may vary due to seasonality, the timing of sales, and the state of the economy. But liquidity ratios
can provide small business owners with useful limits to help them regulate borrowing and spending. Some of the best-known measures of a
company's liquidity include:
3.2.1. Current ratio:
It measures the ability of an entity to pay its near-term obligations. "Current" usually is defined as within one year. Though the ideal current ratio
depends to some extent on the type of business, a general rule of thumb is that it should be at least 2:1. A lower current ratio means that the
company may not be able to pay its bills on time, while a higher ratio means that the company has money in cash or safe investments that could be
put to better use in the business.
Formula: Current ratio =
Current Assets
Current Liabilitues

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2009 2010 2011 2012 2013 Average
Easltand Inurance Ltd 1.95 2.35 3.71 1.46 1.95 2.28
Global Insurance Ltd 1.83 1.62 1.70 1.32 1.15 1.53
Federal Insurance Ltd 1.57 1.64 2.41 2.42 2.29 2.07
co LTd 3.10 3.50 2.68 2.54 3.82 3.13
Findings
0.00
0.50
1.00
1.50
2.00
2.50
3.00
3.50
4.00
4.50
2009 2010 2011 2012 2013
Easltand Inurance Ltd
Global Insurance Ltd
Federal Insurance Ltd
Green Delta Insurance LTd

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Here, if the condition among four companies is considered than Green Delta insurance co. Ltd’s o ditio is est a o g others. Ho e er, Green
Delta insurance co. Ltd as individual is considered then the present condition of Green Delta insurance co. Ltd is not good as it can be noted that
though from the year 2009 to 2010 the current ratio was increasing by the year, but from the year 2010 to 2012 this trend is decreasing which is not
good for the company. Also, it can be said that Green Delta insurance co. Ltd a ts to redu e its urre t asset to eet reditor’s de a d a d
wants to invest those current asset in somewhere else where it could generate more profit. Also, the condition of other companies is not bad
because that companies keep current assets are sufficient or standard value of 2:1. As those have to maintain a certain standard.
Recommendation:
The position Green Delta insurance co. Ltd is better than other companies and thus these companies should compete with itself as the current
ratio trend of concern is year by year decreasing. It needs to sustain its growth and for that reason it should reduce its debt burden as well as should
i rease its urre t assets a ou t. Also, it a sustai its positio to eet reditor’s de a d as the ratio is not bad
3.2.2. Quick Ratio:
It provides a stricter definition of the company's ability to make payments on current obligations. Ideally, this ratio should be 1:1. If it is higher,
the company may keep too much cash on hand or have a poor collection program for accounts receivable. If it is lower, it may indicate that the
company relies too heavily on inventory to meet its obligations. Quick ratio is an indicator of solvency of an entity and must be analyzed over a
period of time and also in the context of the industry the company operates in.
Formula: Quick Ratio=
Quick Assets
Current Liabilities

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Name of the Company 2009 2010 2011 2012 2013 Average
Ltd 3.10 3.50 2.68 2.54 4.09 3.18
Findings
0.00
0.50
1.00
1.50
2.00
2.50
3.00
3.50
4.00
4.50
2009 2010 2011 2012 2013

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Here, if the condition among four companies is considered than Green Delta insurance co. Ltd has higher quick ratio among others. However, the
condition Of Green Delta insurance co. Ltd as individual is considered then from the year 2009 to 2010 the current ratio was increasing by the year,
but from the year 2010 to 2012 this trend is decreasing. If the condition of Estland Insurance co. Ltd and other two companies, is considered then it
is over than standard so this four companies have sufficient quick assets.
Recommendation:
Green Delta insurance co. Ltd, Eastland Insurance co. Ltd and Federal Insurance co. Ltd are investing too many resources in the working capital like
cash, marketable securities and receivables of the business which may more profitably be used elsewhere and Global Insurance co. Ltd use quick assets
more than standard value but lower than three other companies
3.2.3. Cash turnover:
It reflects the company's ability to finance current operations, the efficiency of its working capital
Employment and the margin of protection for its creditors. A high cash turnover ratio may leave
the company vulnerable to creditors, while a low ratio may indicate an inefficient use of working
capital. In general, sales five to six times greater than working capital are needed to maintain a
Positive cash flow and finance sales. High cash turnovers can mean that a company is going through its cash cycles quickly. While this could mean that
your company is being efficient with its cash (i.e. able to replenish it quickly and use cash toward better uses), it could also potentially mean a

33
company is low on cash and may need short-term financing in the future (i.e. a company with a high amount of revenues and a low amount of cash
would have a high cash turnover, but not potentially be in a Good situation). Companies that often make sales based on credit will have higher cash
turnover ratios, cash turnover ratios here would have be investigated more in-depth.
Fomula: Cash turnover=
Net Sales
Net Working Capital
Ltd 0.40 0.27 0.37 0.73 0.42 0.44

34
Findings
Green Delta insurance co. Ltd had almost similar cash turnover ratio over the year. In 2012 it was increase from .37to .73. Estland Insurance co. Ltd
a in 2012 it was increased to 1.34. It should sustain its growth. So, for grabbing the creditors it was a positive side. The condition of Global Insurance
co. Ltd is better than other three companies because from 2009 to 2013, it is increasing
Recommendation:
Eastland Insurance co. Ltd a, Green Delta insurance co. and Ltd Federal Insurance co. Ltd should increase its sales so that they can get more
cash for its future operation. Also, need to be focused on that it should give emphasis on most on cash sales rather than credit sales so that it can
generate more cash from its sales.
0.00
0.50
1.00
1.50
2.00
2.50
3.00
3.50
4.00
4.50
2009 2010 2011 2012 2013
Ltd

35
3.3. Leverage Ratios
Leverage ratios look at the extent to which a company has depended upon borrowing to finance its operations. As a result, these ratios are reviewed
closely by bankers and investors. Most leverage ratios compare assets or net worth with liabilities. A high leverage ratio may increase a company's
exposure to risk and business downturns, but along with this higher risk also comes the potential for higher returns. Some of the major
measurements of leverage include:
3.3.1. Debt Ratio:
It indicates the relative mix of the company's investor-supplied capital. A company is generally considered safer if it has a low debt to equity ratio—
that is, a higher proportion of owner-supplied capital—though a very low ratio can indicate excessive caution. In general, debt should be between 50
and 80 percent of equity. A high debt/equity ratio generally means that a company has been aggressive in financing its growth with debt. This can
result in volatile earnings as a result of the additional interest expense. Lower values of debt-to-equity ratio are favorable indicating less risk. Higher
debt-to-equity ratio is unfavorable because it means that the business relies more on external lenders thus it is at higher risk, especially at higher
interest rates. A debt-to-equity ratio of 1.00 means that half of the assets of a business are financed by debts and half by shareholders' equity. A value
higher than 1.00 means that more assets are financed by debt that those financed by money of shareholders' and vice versa.
Formula: Debt Ratio=
Debt
Owner .s Equity
Eastland Insurance Co. Ltd 0 0 0 0 0 0

36
Ltd 2% 2% 4% 0% 0% 2%
Findings
Eastland Insurance co. Ltd ues 0% debt for fives years and Global Insurance co. Ltd use 0% debt in 2009 and 2010 but use of debt from 2011 .
Federal Insurance reduces the amount of debt use from 2011.
Recommendation:
0 0 0 0 0
0% 0%
21%
17% 16%
21% 22%
12%
4%
1%
2% 2%
4%
0% 0%
2009 2010 2011 2012 2013
Debt to Equity
Esland Insurance Co. Ltd Global Insurance Co. Ltd
Federal Insurance Co. Ltd Green Delta Insurance Co. Ltd

37
The cost of this debt financing may outweigh the return that the company generates on the debt through investment and business activities and become
too much for the company to handle. This can lead to bankruptcy, which would leave shareholders with nothing. So the Global Insurance co. Ltd
should focus on that issue. It will be better to sustain the condition.
3.3.2. Debt to Total Assets Ratio:
It measures the portion of a company's capital that is provided by borrowing. A debt ratio greater than 1.0 means the company has negative net
worth, and is technically bankrupt. This ratio is similar, and can easily be converted to, the debt to equity ratio. A company's debt ratio of a company
offers a view at how the company is financed. The company could be financed by primarily debt, primarily equity, or an equal combination of both. If
a o pa y has a high de t ratio a o e .5 or 50% , the it is ofte o sidered to e “highly le eraged" hi h ea s that ost of its assets are
financed through debt, not equity). Conversely, if a company has a low debt ratio (below .5 or 50%), this indicates that most of their assets are fully
owned (financed through the firm's own equity, not debt). In some instances, a high debt ratio indicates that a business could be in danger if their
creditors were to suddenly insist on the repayment of their loans. This is one reason why a lower debt ratio is usually preferable. To find a
comfortable debt ratio, companies should compare themselves to their industry average or direct competitors. The higher the ratio, the greater risk
will be associated with the firm's operation. In addition, high debt to assets ratio may indicate low borrowing capacity of a firm, which in turn will
lower the firm's financial flexibility. Like all financial ratios, a company's debt ratio should be compared with their industry average or other
competing firms.
Formula: Debt to Total Assets =
Debt
Total assets
Eastland Insurance Co. Ltd 0% 0% 0% 0% 0% 0%

38
Ltd 1% 1% 2% 0% 0% 1%
Findings
Here, the condition of all four companies is good as the debt ratio is below 50% over the five year.
Recommendation:
0%
2%
4%
6%
8%
10%
12%
2009 2010 2011 2012 2013
Debt to Total assets Ratio

39
So it should sustain that position because the higher the ratio, the greater risk will be associated with the firm's operation. In addition, high debt to
assets ratio may indicate low borrowing capacity of a firm, which in turn will lower the firm's financial flexibility. Like all financial ratios, a company's
debt ratio should be compared with their industry average or other competing firms.

40
Conclusion
From the above analyses considering profitability we can predict that excepting one company in our consideration is going on well and if
the growth is sustainable then the company will do better in future. Considering liquidity ratio we can conclude that their capability to meet their
current obligations is moderate and if we consider the debt position then we find that one company of our consideration is totally out of debt and
another company previously used debt but not now.and companie’s use debt but portion is low. Finally if we decide on the general insurance
industry considering the above 4 companie’s we can say that insurance companie’s are doing well in Bangladesh and there is huge possibility of
success.

41
Appendix
Net Profitability Ratio
2009 2010 2011 2012 2013
Name of the Company
Net Income Net Sales Net Income Net Sales Net Income Net Sales Net Income Net Sales Net Income Net Sales
88902691 217410000 154687280 271540000 197598707 304240000 153393585 346960000 200595094 380190000
24759195 102200000 20165013 106370000 22463311 114630000 31616998 137720000 32730408 134970000
12969059 158940000 14837521 176900000 38697854 203570000 51198049 229230000 55994608 254870000
232650000 726690000 478760000 770310000 134000000 862040000 237670000 1212540000 229030000 1316990000
Return ON Assets
2009 2010 2011 2012 2013
Name of the Company Net Income Total Assets Net Income Total Assets Net Income Total Assets Net Income Total Assets Net Income Total Assets
Eastland Insurance Co. Ltd 88902691 945417100 154687280 1104254291 197598707 1317348359 153393585 1547726506 200595094 1717815580

42
Return On Equity
2009 2010 2011 2012 2013
Net Income Owner's
Equity
Net Income Owner's Equity Net Income Owner's Equity Net Income Owner's
Equity
Net Income Owner's Equity
Name of the Company
Global Insurance Co. Ltd 24759195 217001106 20165013 235522152 22463311 257985463 31616998 289602461 32730408 322332869
Federal Insurance Co. Ltd 12969059 154870543 14837521 169409645 38697854 459146162 51198049 510074888 55994608 565813640
Green Delta Insurance Co. Ltd 232650000 2139755150 478760000 3127205838 134000000 2510326714 237670000 3858352390 229030000 4422416539
Earning Per share (EPS)
2009 2010 2011 2012 2013
Name of the Company Net Income Shares
Outstanding
Net Income Shares
Outstanding
Net Income Shares
Outstanding
Net Income Shares
Outstanding
Net Income Shares
Outstanding
Ltd
232650000 3433076610 478760000 4741790044 134000000 4464212107 237670000 5581605951 229030000 6305326508

43
Co. Ltd
232650000 40824000 478760000 40824000 134000000 40824000 237670000 51030000 229030000 63787500
Investment turnover
2009 2010 2011 2012 2013
Name of the Company Net Sales Total Assets Net Sales Total Assets Net Sales Total Assets Net Sales Total Assets Net Sales Total Assets
Current Ratio
2009 2010 2011 2012 2013
Name of The Company Current
Assets
Current
Liabilities
Current
Assets
Current
Liabilities
Current
Assets
Current
Liabilitise
Current
Assets
Current
Liabilitise
Current
Assets
Current
Liabilitise
Esland Inurance Ltd 505711936 259644998 564612661 240415848 883399713 237868148 824618716 566261024 813869011 416674777

44
Debt Ratio
2009 2010 2011 2012 2013
Name of the Company Debt Owner's Equity Debt Owner's Equity Debt Owner's Equity Debt Owner's Equity Debt Owner's Equity
Global Insurance Ltd 222442512 121558401 248052362 153446808 240056062 140975396 234696467 177404910 248178237 215080006
Federal Insurance Ltd 541820461 345061557 594925575 363390657 938385213 388674231 961472876 396657848 1011339901 441679359
LTd
2681765071 863763052 4056729473 1158386128 3710713905 1385390329 2727777094 1074375217 4267767302 1116531639
Cash Turnover
2009 2010 2011 2012 2013
Name of the
Company
Net Sales Net Working
Capital
Capital
Net Sales Net Working Capital Net Sales Net Working
Capital
Capital
Eastland Insurance
Co. Ltd
217410000 246066938 271540000 323696813 304240000 645531565 346960000 258357692 380190000 397194234
Global Insurance Co.
Ltd
102200000 100884111 106370000 94605554 114630000 99080666 137720000 57291557 134970000 33098231
Federal Insurance
Co. Ltd
158940000 196758904 176900000 231534918 203570000 549710982 229230000 564815028 254870000 569660542
Green Delta
Insurance Co. Ltd
726690000 1818002019 770310000 2898343345 862040000 2325323576 1212540000 1653401877 1316990000 3151235663

45
Debt to Total assets
2009 2010 2011 2012 2013
Name of the Company Debt Total Assets Debt Total Assets Debt Total Assets Debt Total Assets Debt Total Assets

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