Internship Report-FBS, DU (HMT)

INTERNSHIP REPORT
FUND MANAGEMENT OF GREEN DELTA INSURANCE COMPANY
LIMITED: AN EVALUATION
Submitted to the Department of Banking and Insurance,
University of Dhaka as a partial requirement of BBA Program of
2011

ii
GUIDE TEACHER
Professor Md. Abu Taleb
Department of Banking and Insurance
Faculty of Business Studies (FBS), University of Dhaka
SUBMITTED BY
Hasan Mohammad Tareq
ID.: 17-051
BBA Program, 17th
Batch
19TH
MARCH, 2015

ii
LETTER OF TRANSMITTAL
19th
March, 2015
Professor Md. Abu Taleb
Guide Teacher
Internship Program of Bachelor of Business Administration
Subject: Request for accepting the internship report
Dear Sir,
This is a great pleasure to inform you that I have prepared the report on “Fund Management of
Green Delta Insurance Company Limited: An Evaluation” as a part of my Internship under BBA
Program. Preparation of the report gave me an opportunity to know about every pros and cons of a
non-life insurance company in Bangladesh – what they do, how they do, why they do, what are called
„funds‟ in a non-life insurance company, how they are managed and finally what are the problems that
may lie in fund management. I tried the utmost I was capable of preparing this report and hope it will
satisfy your desire.
With due respect I request you to excuse for any mistake of mine that may exist in this report despite
my best effort and to view them with your generous consideration.
Sincerely Yours
………………………………………….
ID.: 17-051
BBA Program, 17th
Batch

iii
SUPERVISOR’S CERTIFICATE
This is to certify that the internship report on “Fund Management of Green Delta Insurance
Company Limited: An Evaluation” in the bona fide record at the report is done by Hasan
Mohammd Tareq, ID: 17-051, 17th
batch, BBA program as a partial fulfillment of the requirement of
Bachelor of Business Administration (BBA) degree from the Department of Banking and Insurance,
University of Dhaka.
The report has been prepared under my guidance and is a record of the bona fide work carried out
successfully.
……………………………………………
Signature of the Supervisor

iv
DECLARATION
I, hereby, declare that this report entitled as “Fund Management of Green Delta Insurance
Company Limited: An Evaluation” is an original of work mine and it has been prepared under the
guidance of Professor Md. Abu Taleb, the Guide teacher of my internship program as a requirement
for completion of my Bachelor of Business Administration (BBA) degree from Department of
Banking and Insurance, Faculty of Business Studies (FBS), University of Dhaka.
This report is prepared solely for Department of Banking and Insurance, Faculty of Business Studies
(FBS), University of Dhaka. This report neither fully nor partially has ever been submitted for any
other Certificate/Degree/Diploma or Qualification to any other University/College/Institution or
Organization.
………………………………………….
ID.: 17-051
BBA Program, 17th
Batch

v
ACKNOWLEDGEMENT
At the very outset, I would like to express my deepest gratitude to Almighty Allah Subhan Wa Ta‟ala
for giving me the opportunity to join at Green Delta Insurance Company Limited and for giving me
strength and patience to finish the report within the scheduled time.
From the core of my heart, I would like to thank my respectful guide teacher of my internship
program Professor Md. Abu Taleb, Department of Banking and Insurance, Faculty of Business
Studies (FBS), University of Dhaka, who helped me in every steps of my internship.
I am really grateful to the HRD of Green Delta Insurance Company Limited for choosing me as an
intern at their Head Office out of the eight candidates.
My gratitude then goes to Md. T.H Forhad (Senior Executive Director), Kabir Ahmed Chowdhury
(in-charge, Principal Branch Department), Papia Rahman ACII (Executive Director, Underwriting
Management Department) for helping me a lot by providing information I needed. My special thanks
goes Ali Tareque Parvez (First Assistant Vice President, Underwriting Management Department) who
helped me a lot at my work place by answering any question that I had asked him and by providing
any pieces of information that had wanted from him. I would also like to give my special thanks to
Chinmoy Chakrabarty (First Senior Vice President, Finance and Accounts Department) who helped
me a lot at the eleventh hour. I thank Maksura Siddiqa from whom I have gathered some hands-on
experience. Everybody mentioned here helped me amass the requisite information for the preparation
of the report.
I hope that the dynamic managerial and supervisory skills of the personnel will give inspiration to
anybody to build his/her career at Green Delta Insurance Company Limited.
With the help of all the above-mentioned helping hands it has been possible for me to make the report
ready. I have learned a lot of things in the course of preparing this report.

vi
EXECUTIVE SUMMARY
The objectives of the report are to be familiar with fund management and its environment of
the company, to identify the weakness in managing funds efficiently and to provide some suggestions
in order to solve the problems that lie in fund management of the company.
In order to prepare the report, I had to work at the Head Office of Green Delta Insurance
Company Limited as an intern for the past two months. Despite the topic being “Fund Management”,
I was assigned to Underwriting Management Department (UMD) by the HRD of GDICL. I worked
five days in a week under the guidance of the First Assistant Vice President of UMD. I took
everything in my notebook that I was learning from my work on daily basis thinking that it would
help me prepare my report better. Besides this, I depended on the annual reports of past years and the
journals of GDICL for collecting data.
It has been found from my study that the main source of funds of GDICL is the premiums
collected from all the four departments: Fire, Motor, Marine and Miscellaneous. Premiums are
collected on cash basis. The Finance and Accounts department prepares budget in per month for the
following month. The budget is approved by the board and no department can receive cash without
the prior approval of the board. There is no regulation like SLR from IDRA for the insurance
companies in Bangladesh but GDICL keeps 10% reserve on net premiums. There is no particular
model that the company follows for cash management and temporary investment. Rather, the
company depends on market opportunities.
Most of funds of GDICL are invested in quoted shares, followed by FDR and Unquoted
Shares. It has also been found that most of the funds are invested for short term and after that, for long
term. The interest income of GDICL ranks first among all types of investment income, followed by
dividend, profit from sale of shares and other income. In short, though funds are heavily invested in
shares, the top invested income is interest income.
It is suggested that GDICL look forward more to exploit the opportunities for arranging short
term debt financing for different firms and institutions, along with equity financing.
I worked on only the past five years‟ of Data for analysis. The number of the samples is too
few to make my research a rich one. If the size of samples could be increased, then the results would
replicate almost that of the population. Also, the work of my research is on the fund management of a
particular non-life insurance company. Fund management of other non-life/life insurance company
may not be exactly same with this company.

vii
TABLE OF CONTENTS
Titles Page
List of Abbreviations………………………………………………... x
Chapter - 1 Introduction
1.1. Origin of the report…………………………………………… 1
1.2. Objective of the report……………………………………… 1
1.3. Methodology…………………………………………………. 1
1.4. Scope of the study…………………………………………… 2
1.5. Rationale of the study……………………………………….. 2
1.6. Limitations……………………………………………………. 2
Chapter - 2 Company Overview
2.1. GDICL at a Glance…………………………………………….. 4
2.2. Products and Services…………………………………………. 4-6
2.2.1. Corporate…………………………………………… 4
2.2.2. Financial……………………………………………. 5
2.2.3. Retail and SME…………………………………….. 5
2.2.4. Conventional………………………………………... 5
2.2.5. Investment & Portfolio Management………………. 6
2.2.6. Innovation………………………………………….. 6
2.3. Key Financial Variables……………………………………… 7
Chapter – 3 Fund Management System of the Company
3.1. Source of Cash………………………………………………… 11
3.2. Responsible Unit for Fund Management……………………… 11
3.3. Cash Forecast and Desired Cash Balance……………………... 11
3.4. The Cash Reserve System from Premiums…………………… 12
3.5. Models for the Management of Cash………………………….. 12
3.6. Cash Collection and Disbursement Process at a Glance………. 13-14
3.6.1. The Collection Process……………………………… 13
3.6.2. The Disbursement Process………………………….. 13
Chapter - 4 Analysis and Interpretation
4.1. Analysis of the Sources of Cash………………………………. 15
4.2. Analysis of Investment Portfolio………………………………. 16-18
4.2.1. Items of Investment…………………………………. 16
4.2.2. Detailed Amount of Funds Invested…...…………… 17
4.2.3. Maturity Wise Distribution of Investment………….. 18
4.3. Analysis of the Return on Funds Invested………..…………… 19
4.4. The Coefficient of correlation (R) and the Coefficient of
determination (R2
)………………………………………………….. 19
4.5. Interpretation………………………………………………...… 20
Chapter - 5 Findings
5.1. Findings of the Study………………………………………….. 21-22

viii
5.1.1. Findings from Fund Management System…………. 21
5.1.2. Findings from Investment Portfolio………………… 21
5.1.3. Challenges While Managing Funds………………… 21
5.1.4. Problems Faced to Manage Funds………………….. 22
Chapter – 6 Suggestion and Conclusion
6.1. Suggestions………………………………………………........ 23
6.2. Concluding Remarks……………………………………………. 23
References 24
Appendices 25

ix
LIST OF CHARTS AND TABLES
PARTICULARS Page
No. CHARTS
Chart 1 Invested Assets and Sector Wise Invested Assets of GDICL……… 8
Chart 2 EPS of GDICL……………………………………………………… 8
Chart 3 Gross Premium of GDICL…………………………………………. 9
Chart 4 Earning After Tax of GDICL…………………………………….… 9
Chart 5 Gross Premium of GDICL…………………………………………. 9
Chart 6 Total Assets of GDICL……………………………………………... 10
Chart 7 Equity of GDICL…………………………………………………… 10
Chart 8 Proportion of Premiums from 2011-2013 15
Chart 9 Amount of Investment of GDICL from CY 2009-2013……………. 17
Chart 10 Share (%) of Investment of GDICL………………………………... 18
Chart 11 Income from Investment of GDICL from CY 2011-2013…………. 19
No. TABLES
Table 1 GDICL at a Glance……………….………………………………… 4
Table 2 Key Financial Variables of GDICL……………………………….. 7
Table 3 Simple Model for Monthly Budget………………………………… 11
Table 4 Net Premiums of GDICL from 2011-2013………………………… 15
Table 5 Securities/Assets Purchased by GDICL….………………………… 16
Table 6 Detailed Amounts of Funds Invested………………………………. 17
Table 7 Maturity Wise distribution of investment………………………... 18
Table 8 Variables for Correlation (R) and The Coefficient of Determination
(R2
)…………………………………………………………………. 20
Table 9 Result from SPSS…………………………………………………... 20
No. FIGURES
Figure 1 Cash Collection and Disbursement Process of GDICL…………….. 14

x
LIST OF ABBREVIATIONS
BD Bangladesh
CY Calendar Year
GDICL Green Delta Insurance Company Limited
IDRA Insurance Development & Regulatory Authority Bangladesh
UMD Underwriting Management Department
EBIT Earnings Before Interests and Taxes
EAT Earnings After Taxes

CHAPTER - 1
INTRODUCTION
CHAPTER CONTENTS
ORIGIN OF THE REPORT
OBJECTIVES OF THE REPORT
METHODOLOGY
SCOPE O F THE STUDY
RATIONALE OF THE STUDY
LIMITATIONS

FUND MANAGEMENT OF GREEN DELTA INSURANCE COMPANY LTD.: AN EVALUATION Chapter - 1
INTERNSHIP REPORT, FBS - BANKING AND INSURANCE (17051) PAGE 1
1.1. ORIGIN OF THE REPORT
This report is named as “Fund Management of Green Delta Insurance Company Limited: An
Evaluation”. It had to be prepared as a requirement of Internship under BBA Program. Internship
aims at offering the students some practical knowledge beside bookish knowledge and helps the
students to combine the theoretical aspect with the practical one. The topic of the report was assigned
by honourable teacher Professor Md. Abu Taleb, Department of Banking and Insurance, Faculty of
Business Studies, University of Dhaka.
This report is a reflection of what have been learned while working as an Intern at Green Delta
Insurance Company Limited, Head Office.
1.2. OBJECTIVE OF THE REPORT
The objectives of the report are to be familiar with fund management and its environment of the
company, to identify the weakness in managing funds efficiently and to provide some suggestions in
order to solve the problems that lie in fund management of the company.
1.3. METHODOLOGY
1.3.1. RESEARCH DESIGN
This research is an exploratory research which investigates fund management of a non-life insurance
company; especially GDICL.
1.3.2. DATA SOURCES
In order to make the study effective and efficient, following two sources of data and information have
been used widely:
1.3.2.1. PRIMARY SOURCES
i. Discussion with the officers of Underwriting Management Department and Finance and
Accounts Department of Head Office
ii. Discussion with Sr. Executive Director of the company
iii. Discussion with the in-charge of the Principal Branch Department
iv. Visiting different departments of the Head Office
1.3.2.2. SECONDARY SOURCES
i. Annual Reports
ii. Journals Published by the company

1.3.3. DATA COLLECTION INSTRUMENTS
During the exploratory research, in-depth interviews were conducted with executives, managers and
approval officers.
1.3.4. DATA ANALYSIS METHODS AND TOOLS
After collection, data were first carefully scrutinized. Then data gathered from both primary and
secondary sources were arranged orderly and analysed.
1.3.5. SOFTWARE USED
Microsoft Word 2010, Microsoft Excel 2010 and SPSS 17 were used to prepare the report. Bar chart,
line chart and pie chart have been used for graphical representation.
1.4. SCOPE OF THE STUDY
This research paper addresses the fund management of GDICL only. Due to lack of time fund
management of other non-life and life insurance companies are not focused in this paper. So fund
management of those companies may vary from that of this particular company.
1.5. RATIONALE OF THE STUDY
The term paper will be helpful for the students especially for the students of the business studies in
many ways.
Insurance is one of the most underrated sectors in our country. Most of the Bangladeshis have
negative attitude and perception towards this sector. Many reasons have already been identified by
various researchers in this regard. People even do not know about insurance business properly, let
alone fund management.
This research will help gather knowledge about fund management of a non-life insurance company,
understand the process by which a non-life insurance company manages its fund and what can be the
flaws that may exist in the managerial system of fund management.
These types of information will be helpful to be a business leader and perhaps this is why the term
paper was assigned to me and I have taken the job with the utmost cordiality.
1.6. LIMITATIONS
While preparing the term paper, some difficulties had to be faced:

1.6.1. AVAILABILITY OF DATA
Despite the topic being ‘Fund Management’, Underwriting Management Department (UMD) was
assigned to work at. Enough data on the research topic were not available because of this reason.
1.6.2. TIME CONSTRAIN
There were five working days in each week during the standard banking office hour of Bangladesh
(10.00am to 6.00pm). There was not enough free time available during past one month to prepare a
standard internship report.
1.6.3. INDIVIDUAL INCAPABILITY
Nothing in this world is completely perfect. Due to many personal limitations many errors and
mistakes may exist in this report.

CHAPTER - 2
OVERVIEW OF THE
COMPANY
CHAPTER CONTENTS
GDICL AT A GLANCE
PRODUCTS & SERVICES
KEY FINANCIAL
VARIABLES

FUND MANAGEMENT OF GREEN DELTA INSURANCE COMPANY LTD.: AN EVALUATION Chapter – 2
2.1. GDIC AT A GLANCE
Green Delta Insurance Company Limited (GDICL) is one of the leading private non-life insurance
companies in Bangladesh. It was incorporated in December 14, 1985 as a public limited company,
under the Companies Act 1913. Actual operations started on 1st January 1986, with a paid up capital
of BDT 30.00 million. Now (2013), Green Delta Insurance Company Ltd. is amassed about BDT
637.875 million with a credit rating of AA1 and ST1. Green Delta Capital Ltd., Green Delta
Securities Ltd., Professional Advancement Bangladesh Ltd. and GD Assist Ltd. are four of the direct
subsidiaries of the company. The company provides stock brokerage services through Green Delta
Securities Ltd. (GDSL) and investment supports through Green Delta Capital Ltd. (GDCL).
This company has now become a big family of 14 respected board members, 600+ committed staff,
numerous valued clients and thousands of esteemed shareholders.
GDICL at a Glance
Full Name of the
Company
Green Delta Insurance Company Limited
Nature of Business Non-life Insurance Company
Established December 14, 1985
First Operation 1st January 1986
Current (2013) Paid
Up Capital
637.875 million BDT
Number of Branches 38
Number of Board
Members
14
Subsidiaries Four Subsidiaries; Green Delta Capital Limited and Green Delta Securities
Limited, Professional Advancement Bangladesh Limited and GD Assist
Limited
Share Holders’
Position
Sponsors (51%), General Public (33%), Foreign company and Institution
(8% and 8%)
Table 1: GDICL at a Glance
2.2. PRODUCTS & SERVICES
The company is a non-life insurance company offering four different major insurance services; Fire,
Motor, Marine and Miscellaneous. Details products and services are presented below:
2.2.1. CORPORATE
 Risk Management
 Industrial All Risk Insurance including Machinery Insurance and Business Interruption

 Property All Risk Insurance including Business Interruption
 Electronic Equipments and Computer Insurance
 Professional Indemnity Insurance
 Comprehensive Machinery Insurance
 Comprehensive General Liability (CGL)
 Product & Public Liability Insurance
 Directors and Officers Liability (D&O)
 Fire and Allied Perils Insurance
 Marine Cargo and Hull Insurance
2.2.2. FINANCIAL
 Cash-in-safe, Cash-in-transit & Cash-on-counter Insurance
 Portfolio Cover
 Credit Card Indemnity Insurance
 Bankers Blanket Insurance
 Bank Lockers Insurance
 A.T.M. Booth Insurance
 Banc assurance
2.2.3. RETAIL & SME
 Fire and Allied Peril Insurance
 Marine Cargo and Hull Insurance
 Personal Accident
 Health Insurance
 Overseas Mediclaim Insurance
 Micro Insurance
 Micro Health Insurance
 Nibedita-Comprehensive Insurance Policy for Women
 Household Insurance
 Motor Insurance
 Peoples Personal Accident Policy
 Comprehensive Travel Insurance
2.2.4. CONVENTIONAL
 Aviation Insurance
 Automobile Insurance

 Workmen Compensation Insurance
 Miscellaneous Insurance
 Engineering Insurance
 Crop Insurance
 Weather Index Based Insurance
2.2.5. INVESTMENT & PORTFOLIO MANAGEMENT
 Underwriting
 Pre-IPO placement Syndication
 Trusteeship
2.2.6. INNOVATION
Beside the Traditional insurance portfolio, the company introduced following personal line of
products in last year and some those are in pipeline:
 Household Insurance
 Cellular Phone Contingency Insurance
 Weather Index Based Insurance
 Personal Accident Insurance Policy for Migrant workers
In Brief, the company is offering,
 Fire Insurance
 Burglary Insurance
 Marine Insurance
 GD Health
 All Risk Insurance
 Personal Accident Insurance
 Cash-In-Transit & Cash-In-Safe
 Overseas Medical Insurance / Travel Insurance
 Loss of Profit Insurance
 Erection All Risk Policy (EAR)
 Contractors All Risk Policy
 Industrial All Risk policy

 Professional Indemnity
 Contractors Plant & Machinery Policy (CPM)
2.3. KEY FINANCIAL VARIABLES
Taka in Million
Particulars/Year 2013 2012 2011 2010 2009
Gross Premium 2613.45 2603.19 2351.47 2001.31 1601.64
Net Premium 1316.99 1212.53 862.04 770.31 726.69
Net Claims 372.60 201.96 122.43 117.51 134.24
Underwriting Profit 288.16 298.04 124.17 99.67 112.51
Investment Income 204.06 135.45 131.80 577.10 224.24
EBIT 285.13 262.67 143.43 562.41 277.65
EAT 229.03 237.67 134.00 478.76 232.65
Paid up Capital 637.87 510.30 408.24 408.24 408.24
Share Holder’s Equity 4422.41 3858.35 2510.33 3103.56 2139.76
Total Liabilities 1882.91 1723.25 1953.88 1638.252 1293.32
Total Reserve 3294.49 3173.84 2102.09 2695.33 2094.79
Total Assets 6305.32 5581.61 4464.21 4741.79 3433.07
Total Investments 2197.01 1998.95 2363.65 2905.30 1835.34
Fixed Assets 2039.82 1978.30 212.94 134.52 38.26
EPS Tk. 3.69 Tk. 4.05 Tk. 2.60 Tk. 12.31 Tk. 5.70
P/E Ratio 25.73 18.39 46.45 Tk. 26.53 Tk. 29.3
Book Value per Share Tk. 69.33 Tk. 75.61 Tk. 60.88 Tk. 75.41 Tk. 52.41
Market Value per Share Tk. 94.30 Tk. 74.50 Tk. 152.40 Tk. 326.50 Tk. 166.98
Required Solvency Margin 334.09 343.22 224.24 248.73 198.79
Available Solvency Margin 3265.33 2756.01 2143.32 2293.32 1400.11
% of Dividend Paid (Cash) 15% 15% - 40% 25%
% Dividend paid ((Stock) 15% 15% 15% - -
Table 2: Key Financial Highlights of GDICL (Source: Annual Report of GDICL, 2013)
Some of the items from Table 2 are discussed below with graphical representation:

Bank
and
Financi
al
Institut
e
22%
Capital
Market
29%
Subsidiar
ies
7%
Land and
Bulding
Project
36%
Equity
Investme
nts
4%
Other
Investme
nts
2%
Sector Wise
Chart 1: Invested Assets and Sector Wise Invested Assets of GDICL (Source: Annual Report of GDICL, 2013)
The slope of Invested assets from CY 2008 to CY 2013 is upward, meaning that invested assets are
increasing year by year except in CY 2010.
Of the 3 sectors of investment land and building project contributes more (36%), followed by capital
market (29%) and Bank and Financial Institution (22%)
Chart 2: EPS of GDICL (Source: Annual Report of GDICL, 2013)
Chart 3: Gross Premium of GDICL (Data Source: Annual Report of GDICL, 2013)
200
8
200
9
201
0
201
1
201
2
201
3
IA 2146 2598 3759 3238 4697 5173
0
1000
2000
3000
4000
5000
6000
MillionTaka Invested Assets
2008 2009 2010 2011 2012 2013
EPS 12.01 5.7 12.31 2.6 3.73 3.69
0
2
4
6
8
10
12
14
Taka
EPS
200
8
200
9
201
0
201
1
201
2
201
3
Underwriting
Profit
106.16112.5199.67124.17298.04288.16
0
50
100
150
200
250
300
350
MillionTaka
Underwriting Profit
The slope of EPS from CY 2008 to CY
2013 is downward, meaning that the
company is not earning much
compared to its common share
outstanding
The slope of underwriting profit from
CY 2008 to CY 2013 is upward,
implying that the company is earning
very good on per policy.

2009 2010 2011 2012 2013
Gross
Premium
1601.642001.312351.472603.192613.45
0
500
1000
1500
2000
2500
3000
MillionTaka
Gross Premium
Chart 4: Earning After Tax of GDICL (Data Source: Annual Report of GDICL, 2013)
Chart 5: Gross Premium of GDICL (Data Source: Annual Report of GDICL, 2013)
Chart 6: Total Assets of GDICL (Data Source: Annual Report of GDICL, 2013)
200
8
200
9
201
0
201
1
201
2
201
3
Earning After
Tax
245.07232.65478.76 134 237.67229.03
0
100
200
300
400
500
600
MillionTaka Earning After Tax
The trend of EAT is fluctuating over the
period of time (2009-2013). It’s due to
heavy operational expenditure of the
company.
The slope of gross premium from CY
2009 to CY 2013 is upward, implying
that more and more people are
purchasing insurance policy from the
company.
200
8
200
9
201
0
201
1
201
2
201
3
Total Assets2872.53433.14741.84464.25577.66305.3
0
1000
2000
3000
4000
5000
6000
7000
MillionTaka
Total Assets Total assets include all current and non-
current assets in the balance sheet. Total
assets are always the summation of
equity and liability to third parties. The
trend of total assets is upward, meaning
that either equity or liability is
increasing.

Chart 7: Equity of GDICL (Data Source: Annual Report of GDICL, 2013)
2008 2009 2010 2011 2012 2013
Equity 1719 2140 3104 2510 3858 4422
0
1000
2000
3000
4000
5000
MillionTaka Equity
The slope of equity is upward. That
means, it is equity for which total assets
of the company are increasing.

CHAPTER - 3
THE FUND MANAGEMENT
SYSTEM OF THE COMPANY
CHAPTER CONTENTS
SOURCE OF CASH
RESPONSIBLE UNIT FOR
FUND MANAGEMENT
CASH FORECAST AND
DESIRED CASH BALANCE
THE CASH RESERVE
SYSTEM FROM PREMIUMS
MODELS FOR THE
MANAGEMENT OF CASH
CASH COLLECTION AND
DISBURSEMENT PROCESS
AT A GLANCE

3.1. SOURCE OF CASH
Premiums collected from every insurance policy are the main source of funds. All premiums are
collected on cash basis. Only the premiums of marine insurance may remain outstanding from 30 to
90 days since the premiums for this class of insurance are on instalment basis. But until and unless
they are collected fully, outstanding premiums are not treated as ‘premiums’ as the company uses
cash basis accounting. That means, the ‘premiums’ on financial statements are noting but some cash
collected. Investment incomes deposited in banks are sometimes used as secondary source of cash.
3.2. RESPONSIBLE UNIT FOR FUND MANAGEMENT
The Finance and Accounts Department of the company is the responsible unit for fund
management. The CFO and the CA are two key personnel in the unit. The unit pays close attention to
cost and risk in order to really capitalize on the cash flow opportunities. Ensuring the proper liquidity
of the funds is a crucial aspect of the fund managers’ position.
3.3. CASH FORECAST AND DESIRED CASH BALANCE
In every month the Finance and Accounts department prepares a budget for the following month after
consulting with the board. The simple budget format is presented below:
Table 3: Simple Model for Monthly Budget
It should me clearly mentioned that the company does not hold any desired cash in hand unlike other
companies. There are three reasons behind it:
January February March April May June
Cash Disbursement For:
Management Expenses and Salary
Reinsurance (Previous month’s)
Claims
Commissions
Total Disbursement
Cash Collection From:
Premiums
Add: Investment Income (if any and necessary)
Total Receipt
Net Cash Flow (Total Receipt – Total Disbursement)
Add: Beginning Cash (if any)
Total Cash

i) The first reason is that, the monthly amount cash outflows are almost certain. For
example:
Management Expenses and Salary are very much non-volatile and almost fixed.
For honouring reinsurance, the company gets 45 days. That means if the company is to pay any
claim against reinsurance policies purchased, it will pay that claim in the middle of the next month
(30 days + 15 days). The wisdom behind this strategy is that, the longer the company holds cash
balances in the bank, the better return it will get. So the company utilized the maximum 45 days to
honour the claims on reinsurances.
Any big investment is planned before two or three months.
In case of big claims, the company gets more than one and half months. For any claim besides the
forecasted one, the company holds a reserve.
ii) The second reason is that, an insurance company is not a bank like institution. It is not
bound to pay claims immediately as a bank is. If a client of a bank draws a cheque upon
the bank then the bank by law is bound to honour the cheque immediately in every time,
except in few circumstances. But the settlement process of any insurance company takes a
significant time. So the dilemma between Asset and Liability maturity is quite trivial in
the company.
iii) The third reason is that, the company prefers to put cashes in investment rather than to
hold cash balances in hand because of the returns earned in them and because of having
little dilemma between Asset and Liability maturity mismatch problem.
3.4. THE CASH RESERVE SYSTEM FROM PREMIUMS
Every scheduled bank in Bangladesh has to maintain a statutory reserve (current rate is 19.5%) from
the deposits collected. But there is no rule from IDRA for any insurance company to hold a certain
percentage from its premiums collected. The company can invest the total cash collected from
premiums or if necessary, the company can hold the total cash in vault or in bank. But the company
currently holds 10% of net premiums for Reserve for exceptional loss.
3.5. MODELS FOR THE MANAGEMENT OF CASH
As far as the models for management of cash and temporary investments are concerned, four models
are found that companies generally follow:
i) The Baulmol Model
ii) The Beranek Model
iii) The Miller-Orr Model and
iv) The Stone Model

GDICL does not replicate only a singles model for cash management and temporary investment.
Rather, it uses a combination of the Baumol model and the Beranek model. The company is assumed
to receive cash continuously as insurance policies are sold all around the year. But the company in
some cases pays out the cash periodically and in other cases pays out continuously. For example the
company has investment in Lands as well as in stocks of other company. Investments/disinvestments
in assets like lands are one time, but investments/disinvestments for assets like stocks are continuous.
The adoption of the model completely depends on the market opportunities.
3.6. CASH COLLECTION AND DISBURSEMENT PROCESS AT A GLANCE
3.6.1. THE COLLECTION PROCESS
i) Collection Documents Received. In this first stage, each and every documents of a sold
policy – premium outstanding list, money receipt, bank deposit slip, bank statement and
premium collection sheet are collected from respective parties. Balances from ‘Premium
Collection Sheet’ go to two separate sheets; Current Recovery Sheet and Previous Recovery
Sheet.
ii) Outstanding Premium Prepared and Updated. Current year’s outstanding and previous
outstanding are adjusted from Current Recovery Sheet and Previous Recovery Sheet
respectively.
iii) VAT Separation and Deposit. Clients’ 15% vat are separated and then deposited to particular
VAT account.
iv) Bank’s Registration and Reconciliation. The after VAT adjusted balance will be registered
and reconciled by the bank.
v) Premium Collection Summarizing. In this stage premiums will be summarized based on
insurance class and bank.
vi) Balances Transferred from Collection Accounts to Mother Account. There are four hundred
(400) collection accounts of GDICL to collect premiums. All of the balances in this stage will
be channelled to the two (2) mother accounts. This is more or less lockbox alike.
3.6.2. THE DISBURSEMENT PROCESS
i) Allocation. For the budgets prepared by the finance and accounts department for each
following months, required amount of cashes for each department are transferred to them
from the mother accounts with the approval of board. It should be mentioned that no
department/unit can use the cash of the mother account as per their whim. It is the board that
approves for receiving required amount money from the mother accounts according to budget
prepared.
ii) Final Disbursement. Respective departments disburse cash for following purposes:

 Expenses
 Investments
The entire process is presented below:
Figure 1: Cash Collection and Disbursement Process of GDICL

CHAPTER - 4
ANALYSIS AND
INTERPRETATION
CHAPTER CONTENTS
ANALYSIS OF THE
SOURCES OF CASH
ANALYSIS OF
INVESTMENT PORTFOLIO
ITEMS OF INVESTMENT
DETAILED AMOUNT OF
FUNDS INVESTED
MATURITY WISE
DISTRIBUTION OF
INVESTMENT
ANALYSIS ON THE
RETURN ON FUNDS
INVESTED
THE COEFFICIENT OF
CORRELATION (R) AND
THE COEFFICIENT OF
DETERMINATION (R2
)

4.1. ANALYSIS OF THE SOURCES OF CASH
Funds are collected mainly form the following sources:
a. Fire Insurance premiums
b. Marine Insurance premiums
c. Motor Insurance premiums
d. Miscellaneous Insurance premiums
Premiums collected from different classes of insurances are presented below:
Taka in million
Year 2013 2012 2011
Amount Proportion Amount Proportion Amount Proportion
Fire 564.9 0.429 396.7 0.327 374.8 0.435
Marine 528.6 0.401 608.8 0.502 318.9 0.370
Motor 153.8 0.117 130.2 0.107 115.3 0.134
Misc. 69.8 .053 76.8 0.063 53.1 0.062
Total 1317.1 1 1212.5 1 862.1 1
Table 4: Net Premiums of GDICL from 2011-2013 (Source: Annual Report of GDICL, 2013)
Chart 8: Proportion of Premiums from 2011-2013
0.435
0.327
0.429
0.37
0.502
0.401
0.134 0.107 0.117
0.062 0.063 0.053
2011 2012 2013
Proportion of Premiums
Fire Marine Motor Misc.
Analysis: From the graph it is seen
that premiums from fire insurance
ranks first in case of total amount of
premiums for CY 2011 and CY 2013,
followed by marine insurance. That
means, fire insurance and motor
insurance are the two classes of
insurance leading the company ahead.

4.2. ANALYSIS OF INVESTMENT PORTFOLIO
4.2.1. ITEMS OF INVESTMENT
The company manages portfolio of a wide range of assets. It invests in the following items.
Types Items
General Investment
Investment in Government Bond
Investment in Debentures
Investment in GDSL as Margin Loan
Investment in quoted shares
Investment in unquoted share
Jalalabad Telecom Ltd.
Green Delta AIMS Ltd.
United Hospital
Beximco Pharma Preferred Shares
United Power Generation
Financial Excellence
CDBL
BD Venture
Swiss Pro BD Ltd.
Heritage Life Insurance Company Ltd.
Energypac Power Generation Ltd.
The ACME Laboratories Ltd.
Investment in Subsidiaries
Green Delta Capital Limited
Green Delta Securities Limited
Other
Land
Plant, Vehicle and Equipment
Misc.
Table 5: Securities/Assets Purchased by GDICL

Chart 9: Amount of Investment of GDICL from 2009-2013 (Source: Annual Report of GDICL, 2013)
4.2.2. DETAILED AMOUNT OF FUNDS INVESTED
Detailed amounts of fund invested are presented below:
Taka in Million 2013 2012 2011
Particulars Amount Total
%
Growth Amount Total
%
Growth Amount Total
%
NIB 25 0.76 124 4.5 0.2 0.0 4.5 0.2
Fixed Deposits 1106.16 33.49 35.27 878.2 30.5 62 542.2 18.6
Quoted Shares 1485.86 44.98 27.19 1515.9 52.7 -13 1743.4 60.0
Un-Quoted Share 226.28 6.85 46.14 139 4.8 60.5 86.6 3.0
Debentures 4.34 0.13 20.70 5.2 0.2 -25.7 7 0.2
Mutual Funds - - - - - - 200 6.9
Investment in
Subsidiaries
349.98 10.60 49 200 7.0 - 200 6.9
Investment in GDSL
as margin Loan
105 3.18 27.38 107.5 3.7 -6.5 115 4.0
Others 0.52 .02 (0.42) 26.7 0.9 276.1 7.10 0.2
Totals 3303.14 100 32.03 2877 100 -1 2905.8 100
Table 6: Detailed Amounts of Funds Invested (Source: Annual Report of GDICL, 2013)
Analysis: In terms of percentage in total assets, investment in quoted share (Blue coloured) ranks first
in each of the past three years (60%, 52.7% and 44.98%), followed by Fixed Deposits and Unquoted
share
2009 2010 2011 2012 2013
Investment 1835.33 2905.3 2363.651998.952197.01
0
500
1000
1500
2000
2500
3000
3500
BDTinMillion Amount of Investment
Analysis: The mean of investment
from 2009-2013 is around 2260
million taka. The trend fluctuates; it is
neither upward trending nor downward
trending.

Chart 10: Share (%) of investment of GDICL
4.2.3. MATURITY WISE DISTRIBUTION OF INVESTMENT
The company invests both for short and long term. Items along with their respective maturity are as
follows:
Taka in Million
Year 2013 Year 2012
Short
Term
Long
Term
Total
Total
%
Growth
Short
Term
Long
Term
Total
Total
%
Government
Bond
- 25 25 0.40% 456% - 4.50 4.50 0.08%
Investment in
Quoted Share
1485.86 - 1485.86 23.57% -2% 1515.98 - 1515.98 27.18%
Sub 349.98 349.98 5.55% 75% - 199.98 199.98 3.59%
Equity
Investment
- 226.31 226.31 3.59% 37% - 165.25 165.25 2.96%
Debenture
and others
109.86 - 109.86 1.74% -3% 113.24 - 113.24 2.03%
FDR 1106.16 - 1106.16 17.54% 26% 878.15 - 878.15 15.74%
Cash and
Bank Balance
94.43 - 94.43 1.50% 132% 40.62 - 40.62 0.73%
Office Space - 425.87 425.87 6.75% 14% - 373.73 373.73 6.70%
Building - 644.94 644.94 10.23% 0% - 645.91 645.91 11.58%
Land - 800 800 12.69% 0% - 800 800 14.34%
P&E - 166.27 166.27 2.64% 7% - 156.03 156.03 2.80%
Other Assets 868.39 2.25 870.64 13.81% 2% 681.51 2.63 684.14 12.27%
Total 3664.70 2640.62 6305.32 100% 13% 3229.50 2348.03 5577.55 100%
Table 7: Maturity wise distribution of investment (Source: Annual Report of GDICL, 2013)
NIB
0%
FD
19%
QS
60%
UQS
3%
Deb.
0%
MF
7%
IiS
7%
Margin
4%
Other
0%
Share of assets
Analysis: From the chart above it is
clearly seen that GDICL have invested
a major portion of their total investment
in Quoted Share (60%), followed by
FDR.

Analysis: It is found that most of the investments of GDICL are for short term (red coloured). It may
be due to the fact that the company do not face any liquidity crisis.
4.3. ANALYSIS OF THE RETURN ON FUNDS INVESTED
Income earned from investment can be divided into four types:
i) Interest
ii) Dividend
iii) Profit from Sale of Share
iv) Other
Chart 11: Income from investment of GDICL from CY 2011-2013 (Source: Annual Report of GDICL, 2013)
Analysis: Of the four types of income, interest income is the largest one, followed by dividend
income. Both interest income and dividend are upward sloping. The other two are more or less flat. It
means, though the company has heavy investments in stocks, interest income ranks first in terms of
investment income.
4.4. THE COEFFICIENT OF CORRELATION (R) AND THE COEFFICIENT OF
DETERMINATION (R2
)
The coefficient of correlation (R) describes the strength of the relationship of two sets of ratio scaled
variables. It shows, how well one variable can be explained by another. It can assume any value from
-1.00 to +1.00. A correlation coefficient of -1.00 or +1.00 indicates perfect correlation, (+) sign for
positive relationship and (-) sign for negative relationship. On the other hand, the coefficient of
2011 2012 2013
Interest Income 61.5 89.5 130.81
Dividend 12.8 25.5 59.75
Profit from Sale of
Share
39.2 1.3 3.12
Other Income 18.3 19.2 10.37
0
20
40
60
80
100
120
140
MillionTaka
Income from Investments

determination (R2
) is the primary way by which we can measure the extent of the association that
exists between two variables.
In this section a statistical relationship of net claims, underwriting profits and net premiums with total
investment income is shown. For this purpose, past five years’ data (2009-2013) were used to make
the analysis more acceptable. Data, model and assumptions needed to do the research are presented
below:
Type Variable Assumption
Independent
Net Claims There are many factors to accelerate investment income. It is
assumed that the investment income is influenced by net claims,
underwriting profits and net premiums. If the explanatory power of
the independent variables is high over investment income, the
dependent variable, the assumption will be proved.
Underwriting
Profit
Net Premiums
Dependent Investment
Income
Table 8: Variables for Correlation (R) and the Coefficient of Determination (R
2
)
After inputting all those variable using SPSS, the result found is shown below:
R R2
0.523 0.274
Table 9: Result from SPSS
Analysis: The R value is 0.523, meaning that there is a moderate relationship between the
independent variables and the dependent variable. The R2
value is 0.274, which means that only
27.40% variance in investment income can be explained by the variance in net claims, underwriting
profits and net premiums jointly. There must be more independent variables other than net claims,
underwriting profits and net premiums whose variance can explain the variance in investment income
significantly.
4.5. INTERPRETATION
Fire and Marine are two classes of insurance from which the company earns significant amount of
premiums. The list of the investments in securities is more or less long for the company; it invests in
all types of assets. As the insurance policies are for one year, the company has a heavy investment for
short term in stocks. Although funds are heavily invested in stocks, interest income is the top invested
income.

CHAPTER - 5
FINDINGS
CHAPTER CONTENTS
FINDINGS FROM FUND
MANAGEMENT SYSTEM
FINDINGS FROM
INVESTMENT PORTFOLIO
CHALLENGES WHILE
MANAGING FUNDS
PROBLEMS FACED TO
MANAGE FUNDS

5.1. FINDINGS OF THE STUDY
5.1.1. FINDINGS FROM FUND MANAGEMENT SYSTEM
i) Main Source of Cash: Premiums from all classes of insurance. Most of the premiums come
from Fire and Marine insurance.
ii) Responsible Unit for Fund Management: The Finance and Accounts Department. The CFO
and the CA are two key personnel.
iii) Cash Forecast and Desired Cash Balance: Monthly Budget for each following month.
iv) Cash Reserve System from Premiums: 10% reserve on net premiums . But there is no
specific regulation on rate from IDRA.
v) Models for the Management of Cash: No specific model is used by the company.
vi) Cash Collection and Disbursement process: As per traditional non-life insurance companies.
5.1.2. FINDINGS FROM INVESTMENT PORTFOLIO
i) Detailed Amount of Funds Invested: Heavily invested in Quoted Shares, followed by FDR
and Unquoted Shares.
ii) Maturity Wise Distribution of Investment: The major portion is for short term and the rest is
for long term.
iii) Return on Funds Invested: Although funds are heavily invested in shares, the top invested
income is interest income.
5.1.3. CHALLENGES WHILE MANAGING FUNDS
There are two major challenges that the company has to face while managing funds:
i) Lower Investment Income Due to ‘Crisis’. If the company ever exceeds its budget in any
month or if any incident occurs for which the company needs more cash than the budgeted
amount, the company has to liquidate some of its short term assets. The company does not
face any difficulty in this case as the company has invested in short term assets heavily. This
is not any real crisis actually. The main problem lies here; the company has to lose some
investment income if some assets are liquidated before maturity. For example, if any asset is
assumed to be matured after twelve (12) months and for some reasons the company liquidates
the assets after five (5) months, then the income generated from five months will definitely be
lower than that of twelve months.
ii) Multiple Big Claims. If several big claims of BDT 30/40 million are called in one month, the
company may face a great difficulty for the next two or three months.

5.1.4. PROBLEMS FACED TO MANAGE FUNDS
Three main problems that the company has to experience often are:
i) Bargaining Power of Big parties. If a big corporate client wants GDICL to purchase some
stocks of that company despite the fact being clear that the company is not performing well in
the market and the market value of the stocks may start declining any time, GDICL often
cannot ignore the proposal, as they may lose that big corporate client.
ii) Heavy Investment in Stock Market. Investment in quoted share ranks first in the total
investments of the company, followed by FDR and Unquoted shares. But the income on that
equity investment is very poor. The company earns a marginal return from stock market.
iii) Decrease in FDR Rate. There was a time when the rate of return on FDR that the company
earned was 12-13%. But this rate is going down year by year and now it has become a single
digit only.

CHAPTER - 6
SUGGESTIONS AND
CONCLUSION
CHAPTER CONTENTS
SUGGESTIONS
CONCLUDING REMARKS

6.1. SUGGESTIONS
It is quite difficult for an Intern with little knowledge to provide suggestions for a big organization
like GDICL to minimize the problems found. Despite the fact, some suggestions are presented below
based on the knowledge acquired so far:
i. Long Term Investment. In order to earn higher income it is suggested that the company go
for more long term investment.
ii. More Investment in Debt. If everything remains the same, then it is suggested that the
company look forward more to exploit the opportunities for arranging debt financing for
different firms and institutions, along with equity financing. A portion from equity may be
transferred to debt.
iii. Efficient Budget. Monthly Budget must be efficient enough and consider each and every
possible outflow to overcome the problem like Lower Investment Income Due to ‘Crisis’.
iv. Be Tactful. The company should be tactful enough to deal with the big clients’ bargaining
power problem.
v. Reduction in Equity Investment. The company should minimize the investment in stock
market and look forward for debt, since the return earned from stock market is very marginal.
6.2. CONCLUDING REMARKS
In order to develop any type managerial performance, human resource along with professional
knowledge, professional degree and professional skills are some prerequisites for the insurance
companies in Bangladesh. As the insurance sector in our country is one of the most underrated sectors
and people have a negative attitude toward it, the company should come forward to make people
aware about the necessity of insurance in their every-day life and offer lucrative career opportunity to
people for building their career at GDICL.

FUND MANAGEMENT OF GREEN DELTA INSURANCE COMPANY LTD.: AN EVALUATION References
References:
Green Delta Insurance Company Limited 2014, creating differentiation: Annual Report 2013, Green
Delta Insurance Company Limited, Dhaka, Bangladesh
Green Delta Insurance Company Limited (2015), http://www.green-delta.com/home.php, (Accessed
3rd
march 2015)

APPENDICES
CHAPTER CONTENTS
MODEL SUMMARY OF
CORRELATION OF
COEFFICIENT AND
CORRELATION OF
DETERMINATION
GROSS PREMIUM AND NET
CLAIMS OF GDICL
AMOUNT OF INVESTMENT
FROM CY 2009 TO CY
2013

FUND MANAGEMENT OF GREEN DELTA INSURANCE COMPANY LTD.: AN EVALUATION Appendices
APPENDIX 1
Model Summary of Correlation of coefficient and Correlation of determination
Model Summary
Model R R
Square
Adjusted R
Square
Std. Error of
the Estimate
Change Statistics
R Square
Change
F
Change
df1 df2 Sig. F
Change
1 .523a
.274 -1.904 315.09630 .274 .126 3 1 .933
a. Predictors: (Constant), Net_Premium, Net_Claims, Underwriting_Profit
APPENDIX 2
Gross Premium and Net Claims of GDICL
Year Gross Premium Net Claim
2011 2351.47 372
2012 2603.19 201.96
2013 2613.45 122.43
APPENDIX 3
Amount of Investment from CY 2009 to CY 2013
Particulars 2013 2012 2011 2010 2009
Investment 2,197.01 1998.95 2363.65 2905.30 1835.34
Cash and
Cash
Equivalent
1,200.59 918.77 712.74 742.81 822.47
Fixed Assets 2,039.81 1978.31 212.94 134.52 38.26
Other Assets 867.90 681.52 1174.88 959.15 737.00
6,305.32 5577.55 4464.21 4741.78 3433

Internship Report-FBS, DU (HMT)

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