Introduction

A variety of financial institutions exist in the economy of Bangladesh. Among those financial institutions, insurance companies play foremost role in our economy. These companies add to the economy by spreading risk amongst many groups. There are two types of insurance company. Surrounded by the all insurance companies of Bangladesh, forty six of them are listed company. These are General Insurance companies and Life Insurance companies. We accomplished the ratio analysis on the Life Insurance Companies (3) of Bangladesh.

Life insurance companies bear the risk on life of a human being. Their presentation has been analyzed by calculating 5 years (2009-2013) routine. The obligatory information for this ratio analysis has been collected from their own reports.

Foundation of the report:

This report has been commenced as a handy requirement for the “Risk Management & Insurance” [FIN-410] course of BBA program. The report is about “Ratio Analysis of Life Insurance Company of Bangladesh” which filled a study that covers all-important issues applicable for it. To expand practical knowledge in the field we have preferred three Life insurance companies for our report and the report has been arranged in conformity with the instructions of our respectable course mentor “Quazi Sagota Samina”, Assistant Professor, department of business administration.

Environment of the study:

In Bangladesh the starting point of insurance is lost in remains. However, there is no data that insurance in its present form was put into practice earlier to the twelfth century. Thus among financial institutions, insurance companies play a key role in our economy. To analyze this sector’s financial data we have generate some ratios, which we have learnt from our respected course instructor for the course principle.

Goal of the study:

The goals of the study are as follows: To discover the ratios specifying the company’s performance. To recognize these sector’s role to our economy. To identify the prosperity or failure of the companies. To find out the general understanding of an insurance company. Finding authentic state of the companies.

Scope:

The report is paying attention mainly on the Ratio Analysis of Life Insurance Company of Bangladesh. Through which we have got the prospect to collect significant information and gain satisfactory skill about the insurance companies and identify how they use their financial tools to retain their business. We have got adequate core information while preparing this report and utilized the chance to develop our practical knowledge as well as derive concrete ideas.

Methodology:

In order to carry on the report we concave to use both the primary and the secondary data for the flourishing conclusion of the report. But here we didn’t need any primary data for our report.

Secondary Data: The secondary data are collected in following ways: 1. Annual reports (2009-2013)2. Web Sites.

Boundaries:

In the time of our analysis we have faced some troubles that hampered our report. Such problems created some disorder while making the report. If those problems were not shaped then our report would be more remarkable and tinted. The boundaries of our study are given below: It was inflexible to get-together with the group members as we have different time plans. Faced complexity in assembling information which are not given in the websites of the

companies. We had to go to DSE for collecting the annual reports. All the sources are not consistent, so we have cautiously identified the correct information.

Current Insurance Market Environment in Bangladesh:

After the emergence of the People’s Republic of Bangladesh in 1971, the government nationalized the insurance industry along with the banks in 1972 by Presidential Order No. 95. By virtue of this order, all companies and organization transacting all types of insurance business in Bangladesh came under this nationalization order. This was followed by creation of five insurance companies in the life and non-life sector. Further changes were brought on 14th May, 1973. Through the enactment of Insurance Corporation Act VI, 1973 which led to creation of two corporations namely Sadharan Bima Corporation for general insurance and, Jiban Bima Corporation for life insurance in Bangladesh. In other words Sadharan Bima Corporation(SBC) emerged on 14th May, 1973 under the Insurance Corporation Act (Act No. VI) of 1973 as the

only state owned organization to deal with all classes of general insurance & re-insurance business emanating in Bangladesh.

Thereafter SBC was acting as the sole insurer of general Insurance till 1984. Bangladesh Government allowed the private sector to conduct business in all areas of insurance for the first time in 1984. The private sector availed the opportunity promptly and came forward to establish private insurance companies through promulgation of the Insurance Corporations (Amendment) Ordinance (LI of 1984) 1984.

The Insurance Market in Bangladesh now consists of two state-owned corporations, forty three and seventeen private sector general & life insurance companies respectively, a total of 62 insurance companies. Thus the insurance sector in Bangladesh has grown up substantially and deepened remarkably with number of companies in both life and general segments. With the expansion of size of the insurance market, the volume of assets of the industry has also increased substantially.

SBC is entitled to 50% of public sector business. Insurance Corporation (Amendment) Act 1990 provides that fifty percent of all insurance business relating to any public property or to any risk or liability appertaining to any public property shall be placed with the SBC and the remaining fifty percent of such business may be placed with this corporation or with any other insurers in Bangladesh. But for practical reason and in agreement with the Insurance Association of Bangladesh SBC underwrites all the public sector business and 50% of that business is distributed among the existing 45 private general insurance companies equally under National Co-insurance Scheme.

In respect of reinsurance, the same act provides that fifty percent of a company’s reinsurance business must be placed with the Sadharan Bima Corporation and remaining fifty percent may be reinsured either with this Corporation or with any insurer in Bangladesh or abroad. At present, nearly all the companies place 100% of their reinsurance business with the SBC.

Though the global insurance market declined but Bangladesh has seen a significant growth over last year. Growth in the industrialised countries was -- 2.8% for life and -- 0.6% for non life insurance, however, emerging markets grew at a rate of 4.2% for life and 2.9% for non-life insurance.

Total premium income of private sector life insurance companies in Bangladesh in year 2010 was Tk. 54.7 billion, which represented a growth of 19.02% over that of 2009 (Tk. 45.96 billion). Rise in premium income of private sector life insurance business both in the 1st year and the renewals was due to expansion of life business in the country through introduction of micro insurance like Sujhan Bima, Greeho Sanchaya Bima, Gana Grameen Bima, Loko Bima, Jana Bima, Palli Bima, Islami Khudra Bima, Group Bima, and Wage Earners' Group Insurance

scheme etc. The life fund of private insurance companies increased to Tk. 134.93 billion as at 31st December 2010, registering an increase of 28.32%.

The total investment made by the private sector life insurance companies in year 2010 was Tk. 113.14 billion, an increase of 29.97%. The total assets of the private sector life insurance companies stood at Tk. 152. 93 billion as at 31st December 2010, an increase of 29.58%.

The gross premium income of non-life private sector insurance companies increased from Tk. 12.28 billion in 2009 to Tk. 14.88 billion in 2010, a growth of 21.16%. The total investment made by the private sector general insurance companies in year 2010 was Tk. 17.11 billion. The total assets of non-life insurance companies stood at Tk. 33.37 billion and that of Shadharan Bima Corporation at Tk. 11.21 billion in 2010.

Considering what is happening in outside world, especially in other similar or neighbouring countries, our insurance industry still need to go a long way. Governance model is weak, product base is shallow, risk taking ability is low due to low capital base and premium income is low with low market penetration. There are instances of major corruption with regard to premium collection, reinsurance, claim settlement and etc. There are also instances of insider trading, director's manipulation and lack of control. The quality of manpower is quite poor and no major investment or focus was put in for their development. The preliminary review by the regulatory agency revealed horrendous pictures. Few company bosses even tried to harass the regulators under the coverage of few political masters since they were not dancing according to their tunes. The intelligence agency reports also found massive irregularities in the major life and non-life insurance companies. A large section of population, non-resident workers/remittance earners, agriculture are still outside the insurance coverage. Their asset-liability management is quite poor and there is rampant interference by the board in day to day affairs of the companies.

Good part is, the present IDRA seniors do have respectable understanding about what is going around. They did put up a laundry list too. We all should hope and pray, they are being allowed to work properly and provided with adequate support from all stakeholders. They should also bring in more competition into this opportunity space, allow more internationally recognized operators to join the journey towards excellence and thereby build up a respectable insurance sector in Bangladesh.

Company Profile:

SUNLIFE INSURANCE COMPANY LIMITED

This insurance industry is now at the final stage of transition. In their solvency position, the paid up capital for general and life insurance companies have been raised to Tk.400 million and Tk.300 million respectively.

Their main objective is to ensure the financial betterment and welfare to the insured and the dependent. They want to help in bearing the children’s martial and educational expanse. They also mitigate multifarious needs and ensure the welfare of individual and family. They are forced for national savings and socio economic uplift at national plane. They also want to create job opportunities for the unemployed educated people.

Vision:

Their visions are following:

To be a leading life insurance company and to be a company with due solemnity To corporate social responsibility to the society uphold by taking life risks of the policy

holders.

Mission:

Their missions they are up to are following:

To provide unequal service, protect their policy holders interest and contribute for economic stabilization of the company.

To maintain stakeholders interest with fair and transparent operation.

FAREAST ISLAMI LIFE INSURANCE COMPANY LIMITED

Fareast Islami life Insurance company was emerged as the 1st fully fledged Islami Life Insurance Company in the century in 2000 and have by the grace of Almighty Allah, been able to bring confidence among the common people of the country.

Their company has earned a total premium income of Tk.707.46 crore, the highest among Bangladeshi Insurance Companies in the year 2012. The life fund increased to Tk.2080.42 crore from Tk.1648.65 crore. The growth of life fund in the year of 2012 is 26.19% which is satisfactory and the financial position of the company is very sound since the assets increased to Tk.629.85 crore.

Vision:

They will be the premier Islami Life Insurance Company in Bangladesh. They will serve their policyholders with utmost care and provide the best solution for

their needs They will be a company with due solemnity and corporate social responsibility to the

society upheld by taking financial risks. They will provide dynamic services for their policyholders to make them loyal to the

company.

Mission:

Provide financial security to their participants with Life Takaful Policies that are most befitting to their needs.

Make life Takaful a forces and easy saving instrument and a profitable one with attractive bonus.

Collect small savings from the people and invest the accumulated fund for economic stabilization of the country.

Islamization of the economic activities in the country for the solidarity of the Muslim Ummah.

Progressive Life Insurance Company LTD.

Progressive Life insurance was established on January 06, 2000 as a public limited company. In February 27, 2000 obtained registration from Department of Insurance under the insurance act. The company started with paid up capital Tk.35 million against the authorized capital of Tk.250 million. Now the present paid up capital stands to Tk. 82 million. Progressive Life has achieved a laudable growth, maintained a summit reputation and has still been continuing to be a one of the leading private sector Life Insurance Companies in Bangladesh. They offer ordinary life ,group life,health scheme,islami bima prakalpa and microinsurance (sujan bima) also offer taior made scheme for group life schemes.

Vision:

Their vision is to be recognized leader among all life insurance companies in Bangladesh. They will always apply high standards of integrity and responsibility by their activities. Their success will be built on their absolute dedication to the satisfaction of their policyholders,

through constant innovation, operational efficiency, prompt services, cost effectiveness and the talents of their people.

Mission

Their mission is to produce and provide quality and innovative product. Maintain stringently ethical standard in business operation. To ensure benefit to the policyholders, shareholders and the society at large.