Free Essay

Asia Insurance

In: Business and Management

Submitted By nahian22
Words 3629
Pages 15
Table of content:

Cover page:……………………………………………………………..………………………………………………………i
Letter of Submittal:……………………………………………………………..…………………………………....ii
Executive Summary:…………………………………………………………………………………………………..iv

01. Introduction: 2 01.1 Objectives: 3 01.2 Limitation: 3 01.3 Methodology: 3
02. Company overview: 4 02.1 Company information: 4 02.2 Provided services: 5
03. Analysis: 6 03.1 Ratio analysis: 6 03.2 Scope of the study: 7 03.3Limitation: 7 03.4 Analyzed Report: 7 03.5 Profit Analysis: 12
04. Findings: 17
05. Recommendations 18
06. Conclusion: 18
07. Reference: 19

01. Introduction:

The paper investigates the financial data and analyze the position oh the selected company. The business of insurance is gradually expanding in this country. It is not a new idea or proposition for4 the people of Bangladesh. About a century back, during the British ruled in then India, some insurance company started to transact insurance business.
With the emergence of the people’s republic of Bangladesh the government nationalized the insurance industry in 1972. Until 1984 insurance activities were absolutely the domain of the two nationalized insurance corporations. However because of public demand and of necessity insurance companies in the private sector were aloud under the authority of “the insurance Ordinance 1984.”

01.1 Objectives:

We are the student of BBA program. Practical knowledge for this course is an important part. And to acquire practical knowledge in insurance industry we have influenced to do the report. There are some other objectives we got preparing the report. These are: 1. To know insurance company more closely. 2. To know how company make ratio analysis. 3. To understand how ratio can analyzed. 4. To know the exact position of the company by ratio and trend analysis.

01.2 Limitation:

During collecting the data of this report we have faced some limitations whish have made some lacings of the report. These are ▪ The web page does not contain much information. ▪ Their employees have not enough time to provide us enough information. ▪ They are not willing to provide all the relevant information. ▪ We have not got enough time for preparing the report.

01.3 Methodology:

We collected the data form both of the following sources: 1. Primary data(direct contact to the employees) 2. Second data (internet, newspaper, group discussion)
The analysis draws on a combination of internet browsing, interview of employees and documented literature on insurance industries in Bangladesh. Most of the data have been collected from the web address of the Asia Insurance Limited.

02. Company overview:

02.1 Company information:

Date of Incorporation: 30th April 2000
Date of Commencement of Business: 30th April 2000
Date of Registration to Carry on General Insurance Business: 30th May 2000
Registered & Head Office: T.K Bhaban (7th Floor), 13 Karwan Bazar, Dhaka-1215, Bangladesh.
Authorized Share Capital: Tk. 30,00,00,000/- CR which is dividend into Tk. 30,00,000/- shares of Tk.100/- each.
Approved Paid-up Capital: Tk.15,00,00,000/- which is divided into 15,00,000 shares of Tk. 100/- each
Present Paid-up Capital: Tk. 6,00,00,000/- which is divided into 6,00,000 shares of Tk. 100/- each, ownership of the Sponsor Shareholders.
Chairman: Mr. Yussuf Abdullah Harun, FCA
Vice-Chairman: Mr. Mohammed Jamal Ullah
Chairman (Executive Committee): Mr. Abul Bashar Choudhury
Managing Director: Mr. Md. Ezhar Hossain,ABIA
Company Secretary: Mr. Md. Atique Ullah Majumder, LL.B. (Hons.) LL. M.
Auditor: M/S. Pinaki & Company. Chartered Accountants 2/4 (2nd Floor), Nawab Habubullah Road, Shahbag, Dhaka-1000.

02.2 Provided services:

Services provided by the company are being listed bellow:
[pic] Fire Insurance
[pic] Fire Insurance (including Allied Perils)
[pic] Industrial All Risks (IAR)
[pic] Marine Cargo Insurance
[pic] Marine Cargo Insurance transit by Steamer or Powered Vessel
[pic] Marine Cargo Insurance transit by Rail/Lorry/Truck
[pic] Marine Cargo Insurance transit by Inland Rail or Road Conveyance
[pic] Marine Cargo Insurance transit by Inland Cargoes (water borne)
[pic] Marine Cargo Insurance transit by Air Cargo
[pic] Marine Hull Insurance (TLO)
[pic] Engineering Insurance
[pic] Machinery Insurance (Machinery Breakdown)
[pic] Deterioration of Stock (DOS)
[pic] Boiler and Pressure Vessel (BPV)
[pic] Electronic Equipment Insurance (EEI)
[pic] Erection All Risks (EAR)
[pic] Contractor’s All Risks (CAR)
[pic] Motor Insurance
[pic] Motor Insurances for Commercial Vehicle
[pic] Motor Insurances for Private Vehicle
[pic] Motor Insurances for Motor Cycle/ Scooter
[pic] Miscellaneous
[pic] Burglary & House Breaking Insurance
[pic] Cash in Safe
[pic] Cash in Transit
[pic] Cash on Counter
[pic] Cash in Premises
[pic] People Personal Accident (PPA)
[pic] Workmen's Compensation
[pic] Business Interruption
[pic] Overseas Med claim and Holiday Insurance including Study and Employment

Services to the customers:
Best services to the customers are always been first priority of Asia Insurance Limited Our future depends on it. We respect our customer's needs and prompt services are the key policy of our business. We always remain stand by at the crisis of our clients. We provide services to our clients by issuing policy, cover note, certificates and Money receipt; to guide customers on claim procedures; to provide complete product information to the customers for their better understanding and to make recommendations to customers in order to make an affordable choice.

03. Analysis:

03.1 Ratio analysis:

It expresses the relationship among selected items of financial statement data. A ratio expresses the mathematical relationship between one quantity and another. The relationship is expressed in terms of a percentage, a rate, or a simple proportion. Several types of ratio we can find in rational analysis. Here we focus on some important analysis.

03.2 Scope of the study:

The research has been based on ratio ands its trend analysis on the financial state analysis of Asia Insurance LTD. A one of the leading Asia Insurance Limited is a leading general Insurance company in private sector of Bangladesh.


While preparing ratio analysis, following limitations are faced:

1. In the short run the ups and downs are more seems to rather than in the long run. 2. These Short data did not support MINITAB software which is the specific software for preparing Trend analysis. 3. Forecasting is not possible for lacking of use MINITAB. 4. Some terms we did not understand for that we know all the ratio analysis formula but did not identify the exact terms.

03.4 Analyzed Report:

Statement of Ratio Analysis
(The ratio of Asia Insurance Limited shown below based on its Audited d Financial Statements for the year period ended May31, 2008 and year ended December 31, 2007, 2006, 2005, and 2004)
|Year |No.1 Current |No.2 |No.3 |No.4 |No.5 |
| |Ratio |Quick |Account Receivable |Asset |Gross Margin Ratio |
| | |Ratio |Ratio |Turnover | |
| | | | |Ratio | |
| |Current Asset/ |Current |Gross Premium/ |Gross Premium/ |Operating |
| |Current |Asset-Inventory/ |Receivable |Total Asset |Profit/Gross |
| |Liabilities |Current liabilities| | |Premium |
|2004 |1.05 |0.99 |0.73 |0.28 |0.12 |
|2005 |1.22 |1.22 |0.8 |0.31 |0.12 |
|2006 |1.09 |1.08 |1.18 |0.36 |0.11 |
|2007 |1.11 |1.11 |1.77 |0.46 |0.06 |
|2008 |1.35 |1.35 |0.72 |0.2 |0.48 |
|Year |No.6 |No.7 |No.8 |No.9 |No.10 |
| |Operating Income |Net Income |Return on Asset |Return |Earnings Per Share |
| |Ratio |Ratio |Ratio |on Equity |Ratio |
| |Operating |Profit after |Profit After |Profit After |Profit After Tax/No|
| |Profit/Total |Tax/Total |Tax/Total Asset |Tax/Share Holders |of Shares |
| |Operating Revenue |Operating | |Equity | |
| | |Revenue | | | |
|2004 |23.78 |27.46 |3.77 |14.79 |20.22 |
|2005 |19.27 |22.24 |4.16 |16.83 |25.32 |
|2006 |18.89 |19.85 |4.18 |16.16 |26.84 |
|2007 |9.59 |18.66 |5.4 |20.42 |38.78 |
|2008 |61.69 |43.68 |6.72 |21.55 |52.16 |

1. Current ratio: [pic]

The current ratio is a widely used measure for evaluating a company’s liquidity and short term debt-paying ability. The ratio is computing by current assets by current liabilities. Here we show the 2008, 2007, 2006, 2005 and 2004 current ratios for Asia Insurance Limited. In 2004 the ratio is 1.05 means that for every dollar of current liabilities, Asia has 1.05 of current assets. Asia Insurance’s current ratio has increased gradually by 1.22, 1.09, 1.11, and 1.35 according to year 2005, 2006, 2007 and 2008 with one year fluctuation in 2005.

2. Quick/ Acid test ratio: [pic]
It measures of a company’s immediate liquidity. The more the quick ratio, company can do better to operate their company well. The quick ratio of Asia Insurance Ltd is increasing to these previous years. From 2006 to 2008 the ratio (1.08, 1.11, 1.35) has follow a trend but in 2004 to 2005 these rate (0.99, 1.22) has fluctuated.

3. Account Receivable ratio:

This ratio used to assess the liquidity of the receivables. It measures the number of times, on average; the company collects receivables during the period. The turn over improved in 2007 compared to others year 2004(0.73), 2005(0.8), 2006(1.18), 2008 (0.72). The year 2008 this rate is rapidly decreased.
4. Asset turnover ratio:

It means how efficiently a company uses its assets to generate b sales. The ratio is computed by gross premium by total assets. If we compare it with the years then we see that from 2004 to 2007 it has gradually increased by 0.28, 0.31, 0.36, and 0.46. But in 2008 this rate has fallen.

5. Gross margin ratio:

We can calculate this ratio by operating profit by gross premium. This ratio has totally fluctuated from 2004 to 2008. According to the year 2004, 2005, 2006, 2007, 2008 the ratio has 0.12, 0.12, 0.11, 0.06, and 0.48.

6. Operating Income Ratio:

The formula of calculating this ratio is operating profit by total operating revenue. In 2008 this ratio has climbed in the pick point or we got the highest ratio 61.69. In 2007 the ratio is lowest (9.59) than others.
7. Net income ratio:

Calculating this ratio divide by profit after tax by total operating total operating revenue. This rate also was pick point in 2008 (43.68). From 2004 to 2007, it has been decreased slowly. The rate was 27.46, 22.24, 19.85, and 18.66 respectively.
8. Return on assets ratio:


An overall measure of profitability is return on assets. We compute this ratio by dividing net income by average assets. Asia Insurance’s return on assets improved from 2004 to 2008.Its return of 6.72 % was satisfactory in 2008 compared to others years 3.77%, 4.16%, 4.18%, 5.4% and 6.72% respectively.

9. Return on equity ratio:


Another widely used profitability ratio is return on common stockholders’ equity. It measures probability from the common stockholders’ view point. The ratio shows how many dollars of net income of the company earned for each dollar invested by the owners. The common stockholders’ equity ratio rate at the beginning 14.79% and in the last year 2008 this rate is high at 21.55%.
10. Earnings per share ratio:


It measures of the net income earned on each share of common stock. A Measure of the net income earned on a per share basis provides a useful perspective for determining profitability. This ratio in 2004 has 20.22% that increasing gradually 1n 2005 to 2008 by 25.32%, 26.84%, 38.78%, and 52.16% respectively. It indicate that the situation of that company improving day by day.

If we see the total picture of these ratio than it can be said that the performance of Asia Insurance Limited is satisfactory, but for becoming AAA grade Insurance Company in our company it must increase it’s earning per share with developing others ratio compared to industrial average.

03.5 Profit Analysis:

The profit statement of Asia Insurance Limited is given bellow: ASIA INSURANCE LIMITED
Profit Statement
(The profit of Asia Insurance Limited shown below based on its Audited d Financial Statements for the year period ended May31, 2008 and year ended December 31, 2007, 2006, 2005, and 2004)

|Profit or loss account | | | | | |
| |2008 |2007 |2006 |2005 |2004 |2003 |
| |Jan-May |Jan- Dec |Jan-Dec |Jan-Dec |Jan-Dec |Jan-Dec |
|Expenses of management | 4,289,338.00 | 5,917,852.00 | 6,863,161.00 | 5,784,067.00 | 3,678,791.00 | 2,698,943.00 |
|(not applicable to any particular fund | | | | | | |
|or account | | | | | | |
|Promotional expenses | 851,415.00 | 347,944.00 | 1,106,178.00 | 915,961.00 | 391,905.00 | 571,465.00 |
|Legal and other expenses | 95,000.00 | 23,000.00 | 1,733,240.00 | 1,247,120.00 | 318,910.00 | 286,500.00 |
|Derectors remunaration | 90,000.00 | 197,500.00 | 201,250.00 | 175,000.00 | 372,250.00 | 212,000.00 |
|Audit fees | 280,317.00 | 100,000.00 | 100,000.00 | 100,000.00 | 150,000.00 | 50,000.00 |
|Meeting expenses | 181,124.00 | 112,292.00 | 157,460.00 | 59,363.00 | 112,419.00 | 26,182.00 |
|Subscription | 131,000.00 | 215,000.00 | 214,000.00 | 756,339.00 | 275,289.00 | 190,000.00 |
|Lease rental instrument | 831,630.00 | 1,703,585.00 | | | | 143,150.00 |
|Losson sale of assets | | | | | 533,191.00 | |
|Advertisement and publicity | 56,410.00 | 189,730.00 | 531,157.00 | 153,771.00 | | |
|Dividend tax | | | | 600,000.00 | | |
|Employes contribution PF | 272,469.00 | 751,656.00 | 458,982.00 | | | |
|Depreciation | 1,499,973.00 | 2,277,145.00 | 2,360,894.00 | 1,776,513.00 | 1,524,827.00 | 1,219,646.00 |
|Profit for the year | 50,416,220.00 | 32,102,390.00 | 22,690,914.00 | 20,365,925.00 | 17,151,542.00 | 15,841,750.00 |
|transferred to profit and losss | | | | | | |
|appropriation account | | | | | | |
|Total | 54,705,558.00 | 38,020,242.00 | 29,554,075.00 | 26,149,992.00 | 20,830,333.00 | 18,540,693.00 |

Profit of the Asia insurance limited from the year 2003 to 2008 has been analyzed horizontally to understand easily:

| | |Horizontal Analysis | | | |
|2004 |2003 |Increa or | |2005 |2004 |Increa or | |
|Jan-Dec |Jan-Dec |decrease | |Jan-Dec |Jan-Dec |decrease | |
| | |during 2005 (on| | | |during 2005 (on| |
| | |the basis of | | | |the basis of | |
| | |previous year) | | | |previous year) | |
| | |Amount |Percent | | |Amount |Percent |
| 3,678,791.00 | 2,698,943.00 |979,848 |36% | 5,784,067.00 | 3,678,791.00 |2,105,276 |57% |
| 391,905.00 | 571,465.00 |-179,560 |-31% | 915,961.00 | 391,905.00 |524,056 |134% |
| 318,910.00 | 286,500.00 |32,410 |11% | 1,247,120.00 | 318,910.00 |928,210 |291% |
| 372,250.00 | 212,000.00 |160,250 |76% | 175,000.00 | 372,250.00 |-197,250 |-53% |
| 150,000.00 | 50,000.00 |100,000 |200% | 100,000.00 | 150,000.00 |-50,000 |-33% |
| 112,419.00 | 26,182.00 |86,237 |329% | 59,363.00 | 112,419.00 |-53,056 |-47% |
| 275,289.00 | 190,000.00 |85,289 |45% | 756,339.00 | 275,289.00 |481,050 |175% |
| | 143,150.00 |-143,150 |-100% | | |0 | |
| 533,191.00 | |533,191 | | | 533,191.00 |-533,191 |-100% |
| | |0 | | 153,771.00 | |153,771 | |
| | |0 | | 600,000.00 | |600,000 | |
| | |0 | | | |0 | |
| 1,524,827.00 | 1,219,646.00 |305,181 |25% | 1,776,513.00 | 1,524,827.00 |251,686 |17% |
| 17,151,542.00 | 15,841,750.00 |1,309,792 |8% | 20,365,925.00 | 17,151,542.00 |3,214,383 |19% |
| 20,830,333.00 | 18,540,693.00 |2,289,640 |12% | 26,149,992.00 | 20,830,333.00 |5,319,659 |26% |

| |2005 |Increa or | |2007 |2006 |Increa or | |
| |Jan-Dec |decrease | |Jan- Dec |Jan-Dec |decrease | |
| | |during 2005 (on| | | |during 2005 (on| |
| | |the basis of | | | |the basis of | |
| | |previous year) | | | |previous year) | |
| | | | | | | | |
|2006 | | | | | | | |
|Jan-Dec | | | | | | | |
| | |Amount |Percent | | |Amount |Percent |
| 6,863,161.00 | 5,784,067.00 |1,079,094 |19% | 5,917,852.00 | 6,863,161.00 |-945,309 |-14% |
| 1,106,178.00 | 915,961.00 |190,217 |21% | 347,944.00 | 1,106,178.00 |-758,234 |-69% |
| 1,733,240.00 | 1,247,120.00 |486,120 |39% | 23,000.00 | 1,733,240.00 |-1,710,240 |-99% |
| 201,250.00 | 175,000.00 |26,250 |15% | 197,500.00 | 201,250.00 |-3,750 |-2% |
| 100,000.00 | 100,000.00 |0 |0% | 100,000.00 | 100,000.00 |0 |0% |
| 157,460.00 | 59,363.00 |98,097 |165% | 112,292.00 | 157,460.00 |-45,168 |-29% |
| 214,000.00 | 756,339.00 |-542,339 |-72% | 215,000.00 | 214,000.00 |1,000 |0% |
| | |0 | | 1,703,585.00 | |1,703,585 | |
| | |0 | | | |0 | |
| 531,157.00 | 153,771.00 |377,386 |245% | 189,730.00 | 531,157.00 |-341,427 |-64% |
| | 600,000.00 |-600,000 |-100% | | |0 | |
| 458,982.00 | |458,982 | | 751,656.00 | 458,982.00 |292,674 |64% |
| 2,360,894.00 | 1,776,513.00 |584,381 |33% | 2,277,145.00 | 2,360,894.00 |-83,749 |-4% |
| 22,690,914.00 | 20,365,925.00 |2,324,989 |11% | 32,102,390.00 | 22,690,914.00 |9,411,476 |41% |
| 29,554,075.00 | 26,149,992.00 |3,404,083 |13% | 38,020,242.00 | 29,554,075.00 |8,466,167 |29% |

|2008 |2007 |Increa or decrease | |
|Jan-May |Jan- Dec |during 2005 (on the basis of| |
| | |previous year) | |
| | |Amount |Percent |
| 4,289,338.00 | 5,917,852.00 |-1,628,514 |-28% |
| 851,415.00 | 347,944.00 |503,471 |145% |
| 95,000.00 | 23,000.00 |72,000 |313% |
| 90,000.00 | 197,500.00 |-107,500 |-54% |
| 280,317.00 | 100,000.00 |180,317 |180% |
| 181,124.00 | 112,292.00 |68,832 |61% |
| 131,000.00 | 215,000.00 |-84,000 |-39% |
| 831,630.00 | 1,703,585.00 |-871,955 |-51% |
| | |0 | |
| 56,410.00 | 189,730.00 |-133,320 |-70% |
| | |0 | |
| 272,469.00 | 751,656.00 |-479,187 |-64% |
| 1,499,973.00 | 2,277,145.00 |-777,172 |-34% |
| 50,416,220.00 | 32,102,390.00 |18,313,830 |57% |
| 54,705,558.00 | 38,020,242.00 |16,685,316 |44% |

04. Findings:

After investigating all relevant issues and analyzing our findings are:

1. Increasing current gradually by 1.22, 1.09, 1.11, and 1.35 respectively the year of 2005, 2006, 2007 and 2008 with one year fluctuation in 2005. 2. From 2006 to 2008 the acid test ratio (1.08, 1.11, 1.35) has follow a trend but in 2004 to 2005 these rate (0.99, 1.22) has fluctuated. 3. The turn over improved in 2007 compared to others year 2004(0.73), 2005(0.8), 2006(1.18), 2008 (0.72). The year 2008 this rate is rapidly decreased. 4. From 2004 to 2007 asset turnover ratio has gradually increased by 0.28, 0.31, 0.36, and 0.46. But in 2008 this rate has fallen. 5. Gross margin ratio has totally fluctuated from 2004 to 2008. In 2008 this ratio has climbed in the pick point or we got the highest ratio 61.69. In 2007 the ratio is lowest (9.59) than others. 6. In 2008 operating income ratio has climbed in the pick point or we got the highest ratio 61.69. In 2007 the ratio is lowest (9.59) than others. 7. From 2004 to 2007, net income ratio has been decreased slowly. The rate was 27.46, 22.24, 19.85, and 18.66 respectively. 8. Earnings per share ratio in 2004 has 20.22% that increasing gradually. 1n 2005 to 2008 by 25.32%, 26.84%, 38.78%, and 52.16% respectively. 9. Though the year we consider only five so when we draw the graphs then it seems differentiated from the rational analysis explanation. 10. We find the horizontal and vertical analysis of financial statement.

05. Recommendations

We can derive the recommendation after investigating all relevant issues and analyzing the findings:

As we have seen that the ratios do not follow any trend thus it is very tough for the investors to determine future. Now what we think is the company should give more emphasize on a gently rising trend of the ratios or fall whenever it need. More over the company should publish its own future plan about those ratios.

06. Conclusion:

To sum up the whole discussion it can be terminated that, Asia Insurance Limited is proud to be a company that helps people in time of trouble. A company that can and pull all steps when needed. Like the country we are young and have blended our youthful vigor with specialized knowledge and experience. Our Board of Directors includes veterans of insurance, trade & industry, doctors, chartered accountant, business professionals. Our management team comprises of qualified professionals trained from UK, Switzerland, Germany and many other advanced countries.

Asia Insurance Limited transacts a wide range of General Insurance business in Bangladesh including Health Plan Scheme and has gradually developed goodwill and expertise in the field with sound and stable financial position.

07. Reference:

1. www.asiainsu\asiainsu.htm 2. Prothom Alo/daily news paper. 3. " Asia Insurance unveils novel project", The Economic Times, October 21, 2008. 4. http://www. 5. http://www.…...

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