Fin 410-final-report-1

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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.
Quantitative analysis of information contained in a company’s financial statements. Ratio
analysis is based on line items in financial statements like the balance sheet, income statement
and cash flow statement; the ratios of one item – or a combination of items - to another item or
combination are then calculated. Ratio analysis is used to evaluate various aspects of a
company’s operating and financial performance such as its efficiency, liquidity, profitability and
solvency. The trend of these ratios over time is studied to check whether they are improving or
deteriorating. Ratios are also compared across different companies in the same sector to see how
they stack up, and to get an idea of comparative valuations. Ratio analysis is a cornerstone of
fundamental analysis.
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

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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

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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.

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Company overview:
PRAGATI LIFE INSURANCE LIMITED
Pragati Life insurance was established on January 30, 2000 as a public limited company. In April
11, 2000 obtained registration from Department of Insurance under the insurance act. Pragati
Life has been sponsored by some renowned business entrepreneurs of the country linked with
different industrial groups.
2009 2010 2011 2012 2013
Net Profit 185008199 272090495 185008199 425198643 468387581
Total Paid of
Capital
186832361 297254628 483009020 589256023 652033420
Total Assets 1739733841 2589098184 2842622704 3181317178 3512807956
Equity
Capital
750000000 750000000 840000000 940800000 987840000

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Total no. of
Share
Outstanding
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.
Corporate Focus
 Our vision, our mission and our
objectives are to emphasize on the
quality of product, process and services
 leading on growth of the company
 imbibed with good governance
practices.
SUNLIFE INSURANCE COMPANY LIMITED

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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.
2009 2010 2011 2012 2013
Net Profit 15003866 98638678 105989641 176618085 259268956
Total Paid 13583951 12258355 414334071 330175038 427725956

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of Capital
Total Assets 844959204 1023480823 948638372 3658161882 3853808331
Equity
Capital
724421047 801986099 339823901 300000000 315000000
Total no. of
Share
Outstanding
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

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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.
2009 2010 2011 2012 2013
Net Profit 714390176 12477828 16074722 36483228 28452206
Total Paid of
Capital
Total Assets 649960174 523426421 920706966 554516109 775470518
Equity
Capital
406093815 197485703 4786563816 246689711 329928655
Total no. of
Share
Outstanding

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Ratio Analysis of Life
Insurance Companies of Bangladesh
PRAGATI LIFE INSURANCE LIMITED
 Underwriting Ratio
a) Loss Ratio:
The distinction between the ratios of premiums paid to an insurance company and the claims
developed by the company. Loss ratio is the total losses paid by an insurance company in the
form of claims. The losses are added to adjustment expenses and then divided by total earned
premiums. Loss ratios vary depending on the type of insurance. For example, for health

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insurance the loss ratio tends to be higher than for property and casualty such as car insurance.
This is an indicator of how well an insurance company is doing. This ratio reflects if companies
are collecting premiums superior than the sum paid in claims or if it is not collecting enough
premiums to cover claims. Companies that have high loss claims may be experiencing financial
trouble.
Formula:
Loss Ratio = * 100
The Loss ratios of the Pragati Life Insurance Company of Bangladesh are presented below-
Year 2009 2010 2011 2012 2013
Claim
Paid
186832361 297254628 483009020 589256023 652033420
Net
Premium
1083760860 1770082074 1879779609 1813299489 1392083671
Loss
Ratio
17.24% 16.79% 25.69% 32.49% 36.84%
Performance analysis:
In view of the above calculations, the year wise performance analysis of Pragati Life Insurance
Company, on the basis of expense ratios, have been illustrated below-
According to rule, when the expense ratio will decrease then the efficiency will increase.
Here, in above five years (2009-2013) Pragati Life nsurance’s expense ratio has been decreased
for 2years, from the year 2009 to 2010 and then again increased. That means efficiency of the
insurance company is increasing.
b) Expense Ratio:
A measure of what it costs an investment company to operate a mutual fund. An expense ratio is
determined through an annual calculation, where a fund's operating expenses are divided by the
average dollar value of its assets under management. Operating expenses are taken out of a

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fund's assets and lower the return to a fund's investors. Also known as "management expense
ratio" (MER).
Formula:
Expense Ratio = * 100
The expense ratios of the Pragati Life Insurance Company of Bangladesh are presented below-
Year 2009 2010 2011 2012 2013
Underwriting
Expanse
206098116 292961978 370992857 439729651 405357370
Net
Premium
108376080 1770082074 1879779609 1813299489 1392083671
Expanse
Ratio
1.02% 2.55% 0.74% 4.25% 6.12%
Considering the a bove calculations, the year wise performance analysis of Pragati Life
Insurance Company, on the basis of expense ratios, have been described below-
Here, in above five years (2009-2013) Pragati Life Insurance’s expense ratio was decreasing
from the year 2009 to 2011 that means efficiency of the insurance company was increasing. But
in 2012 to 2013 it increases, which indicates the company was not doing good.
c) Combined Ratio:
A measure of profitability used by an insurance company to indicate how well it is performing in
its daily operations. A ratio below 100% indicates that the company is making underwriting
profit while a ratio above 100% means that it is paying out more money in claims that it is
receiving from premiums. The combined ratio is comprised of the claims ratio and the expense
ratio. The claims ratio is claims owed as a percentage of revenue earned from premiums. The
expense ratio is operating costs as a percentage of revenue earned from premiums. The combined

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ratio is calculated by taking the sum of incurred losses and expenses and then dividing them by
earned premium.
Formula:
Combined Ratio = Loss Ratio + Expense Ratio
The combined ratios of the Pragati Life Insurance Company of Bangladesh are presented below-
Year 2009 2010 2011 2012 2013
Loss
Ratio
17.24% 16.79% 25.69% 32.49% 36.84%
Expanse
Ratio
1.02% 2.55% 0.74% 4.25% 6.12%
Combined
Ratio
18.26% 19.34% 26.43% 36.74% 42.96%
Considering the above calculations, the year wise performance analysis of Pragati Life Insurance
Company, on the basis of combined ratios, have been described below-
According to rule, when the combined ratio will be low or decrease then the overall efficiency
will also increase.
Here, in above five years (2009-2013) Pragati Life Insurance’s combined ratio was decreasing
from the year 2009 to 2010 that means efficiency of the insurance company is increasing. But in
2010 to 2012 it increased, which indicates the company was not doing good in.
d) Premium to policyholder Surplus
Premium to Policyholder Surplus =
Net Premium
Policyholder Surplus
The assets of a policyholder owned insurance company minus its liabilities. Policyholder surplus
is one indicator of an insurance company’s financial health. It gives an insurance company
another source of funds, in addition to its reserves and reinsurance, if it needs to pay a higher

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than expected amount of claims. When an insurance company is publicly owned, its assets minus
its liabilities are instead called shareholders’ equity.
Year 2009 2010 2011 2012 2013
Net Premium 1083760860 1770082074 1879779609 1813299489 1392083671
Policyholder
surplus
1507289329 2328212030 1124753906 8131557121 4613611240
premium to
policyholder
surplus
0.7190 0.7602 1.6713 0.2229 0.3017
Company, on the basis of premium to policyholder surplus, have been described below-
According to rule, the when premium to policyholder surplus is more or increase then the overall
efficiency will also increase.
Here, in above five years (2009-2013) Pragati Life Insurance’s premium to policyholder surplus
was increasing from the year 2009 to 2011 that means efficiency of the insurance company is
increasing. But in 2011 to 2013 it decreased, which indicates the company was not doing good.
 Liquidity Ratio
a) Current Ratio:
The current ratio is a accepted financial ratio used to test a company's liquidity (also referred to
as its current or functioning capital position) by getting the proportion of current assets on hand
to cover current liabilities. The thought behind this ratio is to determine whether a company's

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short-term assets such as cash, cash equivalents, marketable securities, receivables and inventory
are readily accessible to pay off its short-term liabilities such as notes payable, current portion of
term debt, payables, accrued expenses and taxes. In theory, the higher the current ratio, the
better.
Formula:
Current Ratio =
The current ratios of the Pragati Life Insurance Company of Bangladesh are presented below-
Year 2009 2010 2011 2012 2013
Current
Asset
897170844 1624366505 1521228479 1951784565 1686101756
Current
Liabilities
136894483 136894483 138620423 187061705 267678178
Current
Ratio
0.655 0.1187 0.1090 0.1043 0.630
Allowing for the calculations, the year wise performance analysis of Pragati Life Insurance
Company, on the foundation of current ratios, have been illustrated below-
According to Rule of Thumb, Current Ratio = 2. Now if a company’s current ratio is more than 2
then the company is toward profitability and if it is less than 2 then the company is toward
liquidity problem.
Here, in above five years (2009-2013) Pragati life Insurance’s current ratio is less than 2
throughout the consecutive five years and it decreases from 2009. That means the company is in
liquidity problem.
 Profitability Ratio
a) Return on Asset(ROA):
This ratio indicates how profitable a company is relative to its total assets. The Return on Asset
(ROA) ratio illustrates how well management is employing the company's total assets to make a

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profit. The higher the return, the more efficient management is in utilizing its asset base. The
ROA ratio is calculated by comparing net income to average total assets, and is expressed as a
percentage.
Formula:
Return on Asset = * 100
The Return on Asset of the Pragati Life Insurance Company of Bangladesh are presented below-
2009 2010 2011 2012 2013
Net
Income
185008199 272090495 185008199 425198643 468387581
Total
Asset
1739733841 2589098184 2842622704 3181317178 3512807956
Return on
Asset
10.63% 10.51% 6.51% 13.34% 13.37%
Company, on the basis of return on assets, have been described below-
According to rule, when the return on assets will increase then the overall profitability will also
increase.
Here, in above five years (2009-2013) Pragati Life Insurance’s return on Asset ratio is
decreasing from the year 2009 to 2011 and it is not a huge percentage that means profitability of
the insurance company is poor. But again in 2012 to 2013 the Return on Asset Ratio increased
which means the profitability is now in good condition.
b) Return on Equity (ROE):
The amount of net income returned as a percentage of shareholders equity. Return on equity
measures a corporation's profitability by revealing how much profit a company generates with

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the money shareholders have invested.Net income is for the full fiscal year (before dividends
paid to common stock holders but after dividends to preferred stock.) Shareholder's equity does
not include preferred shares and also known as "return on net worth" (RONW).
Formula:
Return on Equity = * 100
The Return on Equity of the Pragati Life Insurance Company of Bangladesh are presented
below-
2009 2010 2011 2012 2013
Net
Income
185008199 272090495 185008199 425198643 468387581
Total
Shareholder’s
Equity
750000000 750000000 840000000 940800000 987840000
Return on
Equity
24.66% 35.28% 22.02% 45.20% 47.42%
Performance Analysis:
Company, on the basis of Return on Equity, have been described below-
According to rule, when the return on equity will increase then the overall profitability will also
increase as because the generating net income by utilizing shareholder’s equity.
Here, in above five years (2009-2013) Pragati Life Insurance’s Return on Equity ratio is
decreasing from the year 2009 to 2011. But from 2012 to 2013 the ratio increased in a huge
percentage. So, we can say in this context the company is now doing good.
c) Investment Yield:
The annual percentage return which is considered to be for a specific valuation in an investment
being expressed as the ratio of annual net income (actual or estimated) to the capital value. It is

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therefore a measure of an investor's opinion about the prospects and risks attached to that
investment. The better the prospects and lower the risks, the lower the expected yield and thus
the greater the capital value.
Formula:
Investment Yield = times
The Investment Yields of the Pragati Life Insurance Company of Bangladesh are presented
below-
2009 2010 2011 2012 2013
Investments 759356908 1208947874 1155840096 1229532613 1707613215
Investments
Income
160614291 377849767 141233231 224656707 268372446
Investment
Yield
4.72 3.20 8.18 5.47 6.36
Company, on the basis of investment yields, have been described below-
According to rule, as much as lower the investment yield that is good for company because it is
ensuring the company’s profitability and also good return on investment.
Here, in above five years (2009-2013) Pragati Life Insurance’s investment yields is started from
the year 200 to 2013 it was fluctuating. So, we can say that the company’s investment return is
not stable.

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 Leverage Ratio
a) Debt-Equity Ratio:
The debt-equity ratio is another leverage ratio that compares a company’s total liabilities to
shareholder’s equity. This is a measurement of how much suppliers, lenders and creditors have
committed to the company versus what the shareholders have committed. To a large degree, the
debt-equity ratio provides another vantage point on a company’s level position, in this case,
comparing total liabilities to shareholder’s equity, as opposed to total the debt ratio. Similar to
the debt ratio, a lower the percentage means that a company is using leverage and has a stronger
equity position.
Formula:
Debt to Equity Ratio =
The Debt to Equity Ratios of the Pragati Life Insurance Company of Bangladesh are presented
below-
Year 2009 2010 2011 2012 2013
Total
Liabilities
153504275 394990334 164830517 65903624 156409357
Total
Shareholder’s
Equity
750000000 750000000 840000000 940800000 987840000
Debt Equity
Ratio
90.46% 82.67% 119.62% 170.05% 97.10%
Considering the above calculations, the year wise performance analysis of United Insurance
Company, on the basis debt to equity ratios, have been described below-
According to rule, higher debt to equity ratio will have higher risk that is alarming for the
company.

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Here, in above five years (2009-2013) Pragati Life Insurance’s debt to equity ratio is started from
the year 2009 to 2013 at a fluctuating rate. It means company has moderate condition in liability
equity.
SUNLIFE INSURANCE COMPANY LIMITED
 Underwriting Ratio:
a) Loss Ratio:
Loss Ratio = * 100
The Loss ratio of the Sunlife Insurance Company of Bangladesh are presented:
Year 2009 2010 2011 2012 2013
Claim
Paid
13583951 12258355 414334071 330175038 427725956
Net
Premium
136746267 112508443 154430137 1475478653 1439053684
Loss
Ratio
9.93% 10.90% 9.28% 22.38% 29.72%
The second row of the above table shows the amount of claim which is paid for each particular
year. In the third row we calculated net premium (Premium – Reinsurance premium) for last
respective five years. In the year 2009 to 2011 the loss ratio was in between 9.28 to 10.90. Then
the percentage increased in next two years and in 2011 the loss ratio was 22.38% and in 2013
the ratio was 29.72% which says out of its total net premium, 29.72% claim was settled.

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Usually Insurance Company always chooses which may has less claim request. Thus, if the loss
ratio is decreased we can predict that the company is more efficient.
b) Expense Ratio:
The expense ratios of the Sunlife Insurance Company of Bangladesh are presented below-
Year 2009 2010 2011 2012 2013
Underwriting
Expanse
1437676 1357335 1464932 131506597 107650226
Net
Premium
136746267 112508443 154430137 1475478653 1439058684
Expanse
Ratio
1.05% 1.21% 0.95% 8.91% 7.48%
The second row of the above table shows the amount of underwriting expense incurred each
particular year. We assumed (Underwriting Expense = Advertisement and Publicity +
Registration and Renewals + Legal and Professional Fees). In the third row we calculated net
premium (Premium – Reinsurance premium) for last respective five years. From the above table
we can say the percentage of expense ratio was fluctuating over the period and it increased in
2012 which was 8.91% and slightly decreased in 2013 which was 7.48%, if we compare with the
2009, 2010, and 2011 the percentage was 1.05%, 1.21% and 0.95% This percentage says the
underwriting cost increased in term of its net income. Thus we can say the company in not well
enoughto control of its expense,

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c) Combined Ratio:
The combined ratios of the Sunlife Insurance Company of Bangladesh are presented below-
Year 2009 2010 2011 2012 2013
Loss
Ratio
9.93% 10.90% 9.28% 22.38% 29.72%
Expanse
Ratio
1.05% 1021% 0.95% 8.91% 7.48%
Combined
Ratio
10.98% 12.11% 10.23% 31.29% 37.2%
Considering the above calculations, the year wise performance analysis of Sunlife Insurance
Company, on the basis of combined ratios, have been described below-
will also increase.
In 2013, 37.2% shows if a company’s net premium is 100tk, its loss and expense contribute
37.2tk, which is higher if we compare with the last year 4 year. So we can predict that the
company is not handy enough to minimize its loss and expenses.
Net Premium

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Year 2009 2010 2011 2012 2013
NetPremium 136746267 112508443 154430137 147547365 143305368
Policyholder
surplus
1205381570 289176040 224132905 382120392 855775699
premiumto
policyholder
surplus
0.1134 0.3890 0.6890 0.3869 0.1682
Here, in above five years (2009-2013) Sunlife Insurance’s premium to policyholder surplus was
increasing from the year 2009 to 2011 that means efficiency of the insurance company is
increasing. But in 2011 to 2013 it decreased, which indicates the company was not doing good.
 Liquidity Ratio:
a) Current Ratio:
The Current Ratio of the Sunlife Insurance Company of Bangladesh are presented:
Year 2009 2010 2011 2012 2013
Current
Asset
712103576 915698112 554421186 981142339 825796380
Current
Liabilities
81914906 82530793 131467158 98514969 71433464

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Current
Ratio
8.69 11.10 4.22 9.96 11.56
The second row of the above table shows the amount of Current Assets (Interest, Dividend &
Rents accrued, Sundry Debtors, Cash at bank and cash in hand, Stock of printing & Stationery,
Insurance stamps in hand) for each particular year. In the third row we calculated Current
Liabilities (Liabilities and Provisions) for last respective five years.
According to the rule of Thumb, the current ratio (CR) = 2. If CR > 2it is assumed that the firm
in less profitable condition and, if CR < 2 indicates that firms do not have sufficient current
assets to cover current liabilities that indicates the firms are in a liquidity crisis. Thus, if we
consider current ratio of the Sunlife Insurance Company, which predict firm is highly capable to
manage its current liabilities because the entire ratios are more than 2.
 Profitability Ratio:
a) Return on Asset (ROA):
The Return on Asset ratio of the Sunlife Insurance Company of Bangladesh are presented below-
Year 2009 2010 2011 2012 2013
Net
Income
150038566 98638078 105989641 176618985 259860956
Total
Asset
844959204 1023480823 948638372 3658161882 3853808331
Returnon
Asset
18% 10% 11% 4.83% 7.25%

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According to rule, when the return on assets will incease then the overall profitability will also
increase.
The second row of the above table shows the net income (Total operating income – Tax
provisions) for each particular year. In the third row we showed total assets that the company
held from the year 2009 to 2013. The percentage of ROA is in decreasing trend over the period
which says the company was in a bad position of making profit by using its total assets. The less
the percentage the less a firm is capable to utilize its assets. So the percentage 7.25% indicates
the firm can earn 7.25% return from its total assets.
The Return on Equity ratio of the Sunlife Insurance Company of Bangladesh are presented
below-
Year 2009 2010 2011 2012 2013
Net
Income
15003866 98638678 105989641 176618085 259268956
Total
Stockholder’s
Equity
724421047 868665812 801986099 300000000 375000000
Returnon
Equity
21% 11% 21% 58.87% 48.50%
Company, on the basis of return on equity, have been described below-

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provisions) for each particular year. In the third row we showed total stockholders’ equity that
the company carried from the year 2009 to 2013. The percentage of ROE is in fluctuating trend
from the year 2009 to 2012 which says the company is moderate of making profit by using its
total stockholders’ equity. The more the percentage the more a firm is capable to utilize its
equity. So the percentage 48.50% indicates the firm can earn 48.50% return from its total
stockholders’ equity.
The Investment Yield ratio of the Sunlife Insurance Company of Bangladesh are presented
below-
Year 2009 2010 2011 2012 2013
Investments 23391361 312694519 394972493 117411861 128800919
Investments
Income
77269616 110813643 108337655 85263202 106412786
Investment
Yield
3 3 4 1.38 1.21
Company, on the basis of investment yields, have been described below-
Accordingto rule,asmuch as lowerthe investmentyieldthatisgoodforcompanybecause itis ensuring
the company’sprofitabilityandalsogoodreturnoninvestment.
The second row of the above table shows the amount the Pioneer Insurance Company Invested
for each particular year. In the third row we showed the amount they received from the

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investment that the company held from the year 2009 to 2013. The percentage of investment
yield is in fluctuating trend over the respective years. In 2013, the investment amount was
tk.128,800,919 and to gain the amount it took 1.21 times. Thus the percentage increased may be
because of decreasing investment income for the particular year.
 Leverage Ratio:
a) Debt to Equity Ratio:
Debt to Equity Ratio =
The Debt to Equity ratio of the Sunlife Insurance Company of Bangladesh are presented below-
Year 2009 2010 2011 2012 2013
Total Liabilities 844959204 948638372 330906297 36518188 358380833
Total
Shareholder’s
Equity
724421047 801986099 339823901 300000000 315000000
DebtEquity
Ratio
117% 118% 97.37% 121.94% 113%
Company, on the basis debt to equity ratios, have been described below-
company.

28
Here, in above five years (2009-2013) Sunlife Insurance’s debt to equity ratio is started from the
year 2009(92.39%) to 2012(168.36%) and it is increasing gradually. It means company is not
recovering by paying its liability and also not increasing its equity
Fareast ISLAMI LIFE INSURANCE LIMITED
 Underwriting Ratio:
a) Loss Ratio:
Loss Ratio = * 100
The Loss ratio of the Fareast Islami Life Insurance Company of Bangladesh are presented:
Year 2009 2010 2011 2012 2013
ClaimPaid 207441646 161984195 146422188 126342841 103522316
NetPremium 792480911 718511171 531306262 393350263 323080245
Loss Ratio 26.18% 22.54% 27.56% 32.12% 32.04%
In view of the above calculations, the year wise performance analysis of Fareast Islami Life
Insurance Company, on the basis of expense ratios, have been illustrated below-

29
Here, in above five years (2009-2013) Fareast Islami Life Insurance’s expense ratio has been
decreased for 2years, from the year 2009 to 2010 and then again increased. That means
efficiency of the insurance company is increasing.
b) Expense Ratio:
The expense ratios of the Fareast Islami Life Insurance Company of Bangladesh are presented
below-
Year 2009 2010 2011 2012 2013
Underwriting
Expense
30685910 1279296 2108310 1327541 1279296
Net
Premium
531306262 99280787 532680414 97207799 99280787
Expense
Ratio
5.77% 0.31% 0.39% 1.36% 1.28%
The second row of the above table shows the amount of underwriting expense incurred each
particular year. We assumed (Underwriting Expense = Advertisement and Publicity +
Registration and Renewals + Legal and Professional Fees). In the third row we calculated net
premium (Premium – Reinsurance premium) for last respective five years. From the above table
we can say the percentage of expense ratio was fluctuating over the period and it increased in
2012 which was 1.36% and slightly decreased in 2013 which was 1.28%, if we compare with the
2009, 2010, and 2011 the percentage was 5.77%, 0.31% and 0.39% This percentage says the
underwriting cost increased in term of its net income. Thus we can say the company in not well
enough to control of its expense,
c) Combined Ratio:

30
The combined ratios of the Fareast Islami Life Insurance Company of Bangladesh are presented
below-
Year 2009 2010 2011 2012 2013
Loss
Ratio
27.56% 22.95% 12.15% 34.16% 38.85%
Expense
Ratio
5.77% 0.31% 0.39% 1.36% 1.28%
Combined
Ratio
33.33% 23.26% 12.54% 35.52% 40.13%
Considering the above calculations, the year wise performance analysis of Fareast Islami Life
Insurance Company, on the basis of combined ratios, have been described below-
will also increase.
In 2013, 40.13% shows if a company’s net premium is 100tk, its loss and expense contribute
40.13tk, which is higher if we compare with the last year 4 year. So we can predict that the
company is not handy enough to minimize its loss and expenses.
Net Premium

31
Year 2009 2010 2011 2012 2013
NetPremium 53130626 99280787 532680414 97207799 99280787
Policyholder
surplus
280583471 190939103 478563815 212380391 419032254
premiumto
policyholder
surplus
0.1893 0.5199 1.1130 0.4577 0.2369
Here, in above five years (2009-2013) Fareast Islami Insurance’s premium to policyholder
surplus was increasing from the year 2009 to 2011 that means efficiency of the insurance
company is increasing. But in 2011 to 2013 it decreased, which indicates the company was not
doing good.
 Liquidity Analysis:
a) Current Ratio:
The Current Ratio of the Fareast Islami Life Insurance Company of Bangladesh are presented:
Year 2009 2010 2011 2012 2013
Current
Asset
550948567 704890988 518480330 779230915 643816508
Current
Liability
242439991 264272152 252972860 304874585 252886323

32
Current
Ratio
2.27 2.67 2.05 2.56 2.55
The second row of the above table shows the amount of Current Assets (Interest, Dividend &
Rents accrued, Sundry Debtors, Cash at bank and cash in hand, Stock of printing & Stationery,
Insurance stamps in hand) for each particular year. In the third row we calculated Current
Liabilities (Liabilities and Provisions) for last respective five years.
According to the rule of Thumb, the current ratio (CR) = 2. If CR > 2it is assumed that the firm
in less profitable condition and, if CR < 2 indicates that firms do not have sufficient current
assets to cover current liabilities that indicates the firms are in a liquidity crisis. Thus, if we
consider current ratio of the Fareast Islami Life Insurance Company, which predict firm is highly
capable to manage its current liabilities because the entire ratios are more than 2.
 Profitability Ratio:
a) Return on Asset (ROA):
The Return on Asset ratio of the Fareast Islami Life Insurance Company of Bangladesh are
presented below-
Year 2009 2010 2011 2012 2013
NetOperating
Income
71439076 17477828 16074722 36483228 28452206
Total
Asset
649960174 523426421 920706966 554516109 775470518

33
Returnon
Asset
10.99% 2.38% 1.75% 6.58% 3.67%
Considering the above calculations, the year wise performance analysis of Pioneer Insurance
According to rule, when the return on assets will increase then the overall profitability will also
increase.
provisions) for each particular year. In the third row we showed total assets that the company
held from the year 2009 to 2013. The percentage of ROA is in fluctuating trend over the period
which says the company was in a moderate position of making profit by using its total assets.
The less the percentage the less a firm is capable to utilize its assets. So the percentage 3.67% in
2013 indicates the firm can earn 3.67% return from its total assets.
The Return on Equity ratio of the Fareast Islami Life Insurance Company of Bangladesh are
presented below-
Year 2009 2010 2011 2012 2013
Net
Income
714390176 12477828 16074722 36483228 28452206
Total
Shareholder’s
Equity
329928655 197485703 478563816 246689711 406093815
Returnon
Equity
7.01% 6.32% 14.79% 14.79% 7.01%

34
Insurance Company, on the basis of return on equity, have been described below-
provisions) for each particular year. In the third row we showed total stockholders’ equity that
the company carried from the year 2009 to 2013. The percentage of ROE is in fluctuating trend
from the year 2009 to 2013 which says the company is moderate of making profit by using its
total stockholders’ equity. The more the percentage the more a firm is capable to utilize its
equity. So the percentage 7.01% indicates the firm can earn 7.01% return from its total
stockholders’ equity.
The Investment Yield ratio of the Fareast Islami Life Insurance Company of Bangladesh are
presented below-
Year 2009 2010 2011 2012 2013
Investment 195833662 69775923 195998285 76654233 158328557
Investment
Income
22653053 21356315 29192103 19831871 21703833
Investment
Yield
8 3 7 4 7
Insurance Company, on the basis of investment yields, have been described below-

35
According to rule, as much as lower the investment yield that is good for company because it is
ensuring the company’s profitability and also good return on investment.
The second row of the above table shows the amount the Pioneer Insurance Company Invested
for each particular year. In the third row we showed the amount they received from the
investment that the company held from the year 2009 to 2013. The percentage of investment
yield is in fluctuating trend over the respective years. In 2013, the investment amount was tk.
158,328,557 and to gain the amount it took 7 times. Thus the percentage increased may be
because of fluctuating investment income for the particular year.
 Leverage Ratio:
a) Debt to Equity Ratio:
The Debt to Equity ratio of the Fareast Islami Life Insurance Company of Bangladesh are
presented below-
Year 2009 2010 2011 2012 2013
Total
Liability
369376703 392487918 442149151 342135718 356438264
Total
shareholder
equity
406093815 197485703 4786563816 246689711 329928655
Debt
EquityRatio
90.96% 168.36% 92.39% 138.69% 108.03%
Insurance Company, on the basis debt to equity ratios, have been described below-

36
company.
Here, in above five years (2009-2013) Fareast Islami Life Insurance’s debt to equity ratio is
started from the year 2009(90.96%) to 2013(108.03%) and it is flactuating. It means company is
moderate in paying its liability and equity.
Comparative Analysis
Underwriting Ratio (Loss Ratio)
Year 2009 2010 2011 2012 2013
PRAGATI 17.24% 16.79% 25.69% 32.49% 36.84%
SUNLIFE 9.93% 10.90% 9.28% 22.38% 29.72%
FAREAST 26.18% 22.54% 27.56% 32.12% 32.04%

37
Underwriting Ratio measures a company’s efficiency. Lower ratio of loss ratio indicates better
efficiency of a company. Here we can see that Sunlife Insurance Company Limited is performing
good rather than other company. As its last periods (2013) loss ratio is less than others. So it’s
showing more efficiency.
Underwriting Ratio (Expense Ratio)
Year 2009 2010 2011 2012 2013
PRAGATI 1.02% 2.55% 0.74% 4.25% 6.12%
SUNLIFE 1.05% 1.21% 0.95% 8.91% 7.48%
FAREAST 5.77% 0.31% 0.39% 1.36% 1.28%
0.00%
10.00%
20.00%
30.00%
40.00%
50.00%
60.00%
70.00%
80.00%
2009 2010 2011 2012 2013
AxisTitle
Axis Title
FAREAST
PRAGATI

38
To measure a company’s efficiency underwriting ratio is very effective. Under the heading
“Under writing Ratio” lower ration of Expense ratio indicates better efficiency of a company.
If we consider the expense ratio of these three companies we can see that Fareast Islami Life
Insurance Company is performing good compare to two other. Because the latest period’s (2013)
expense ratio of Fareast is less.
Underwriting Ratio (Combined Ratio)
Year 2009 2010 2011 2012 2013
PRAGATI 18.26% 19.34% 26.43% 36.74% 42.96%
SUNLIFE 10.98% 12.11% 10.23% 31.29% 37.2%
FAREAST 33.33% 23.26% 12.54% 35.52% 40.13%
2009 2010 2011 2012 2013
PRAGATI 1.02% 2.55% 0.74% 4.25% 6.12%
SUNLIFE 1.05% 1.21% 0.95% 8.91% 7.48%
FAREAST 5.77% 0.31% 0.39% 1.36% 1.28%
0.00%
1.00%
2.00%
3.00%
4.00%
5.00%
6.00%
7.00%
8.00%
9.00%
10.00%
AxisTitle
Expanse Ratio

39
Under the heading “Underwriting Ratio” the less the combined ratio the more efficient the
company is. Here if we consider the combined ratio we can see it shows that Sunlife Insurance
Company Limited is performing well than other company. Because the latest period’s (2013)
combined ratio of Sunlife is less than the others.
Premium to policyholder Surplus
Year 2009 2010 2011 2012 2013
PRAGATI 0.7190 0.7602 1.6713 0.2229 0.3017
SUNLIFE
0.1134 0.3890 0.6890 0.3869 0.1682
FAREAST 0.1893 0.5199 1.1130 0.4577 0.2369
0.00%
10.00%
20.00%
30.00%
40.00%
50.00%
2009 2010 2011 2012 2013
Combined Ratio
PRAGATI SUNLIFE FAREAST

40
`
Under the heading “Premium to policyholder surplus” is shows how much premium earned by
the company. Higher ratio indicates more efficiency. If we consider the above chart we can
comprehend that Paragati is performing good that others. Because the latest period’s (2013)
Premium to policyholder surplus of pragati is more than others.
Liquidity Ratio (Current Ratio)
Year 2009 2010 2011 2012 2013
PRAGATI 0.655 0.1187 0.1090 0.1043 0.630
SUNLIFE 8.69 11.10 4.22 9.96 11.56
FAREAST 2.27 2.67 2.05 2.56 2.55
0
0.2
0.4
0.6
0.8
1
1.2
1.4
1.6
1.8
2008 2009 2010 2011 2012 2013 2014
Primum to Policyholder'sSurplus
PRAGATI
SUNLIFE
FAREAST

41
We know that Current Ratio < 2 creates liquidity problem & Current Ratio > 2 creates
profitability problem. Hence, under the heading Liquidity Analysis if we consider the current
ratio we can comprehend that Sunlife Insurance Company Limited is performing well compare
to other company. Because of the latest period’s (2013) current ratio of Sunlife is more than
others.
Profitability Ratio (Return on Asset)
Year 2009 2010 2011 2012 2013
PRAGATI 10.63% 10.51% 6.51% 13.34% 13.37%
SUNLIFE 18% 10% 11% 4.83% 7.25%
FAREAST 10.99% 2.38% 1.75% 6.58% 3.67%
0
2
4
6
8
10
12
14
2009 2010 2011 2012 2013
Current Ratio
PRAGATI
SUNLIFE
FAREAST

42
Usually Return on asset under profitability ratio shows how much net income a company
generated by using its total asset. If we consider the return on asset of these three companies we
can comprehend that Pragati Life Insurance Company is performing good compare to others.
Because of the latest period’s (2013) return on asset of Pragati is more.
Profitability Ratio (Return on Equity)
Year 2009 2010 2011 2012 2013
PRAGATI 24.66% 35.28% 22.02% 45.20% 47.42%
SUNLIFE 21% 11% 21% 58.87% 48.50%
FAREAST 7.01% 6.32% 14.79% 14.79% 7.01%
0.00%
5.00%
10.00%
15.00%
20.00%
2009 2010
2011
2012
2013
Return on Asset
PRAGATI
SUNLIFE
FAREAST

43
Profitability ratio shows that whatever the shareholders invest by using that what is the net
income of a company. Higher return on equity indicates higher profitability. Under the heading
“Profitability Ratio”, if we consider the return on equity we can comprehend that Sunlife
Insurance Company is performing good compare to other company. Because of the latest
period’s (2013) return on equity of Sunlife is more than the others.
Profitability Ratio (Operating Margin)
Year 2009 2011 2012 2013
PRAGATI 19.88% 32.63% 26.14% 16.40% 29.25%
SUNLIFE 86.05% 99.46% 96.19% 98.06% 82.59%
FAREAST 80.67% 89.87% 75.58% 87.18% 94.17%
0.00%
10.00%
20.00%
30.00%
40.00%
50.00%
60.00%
2009 2010
2011
2012
2013
Return on Equity
PRAGATI
SUNLIFE
FAREAST

44
Under the heading “Profitability Ratio” if we consider the Operating Margin we can comprehend
that Fareast Islami Life Insurance Company Limited is performing well compares to others
because their latest period’s (2013) operating margin is more than other two companies.
Profitability Ratio (Investment Yield)
Year 2009 2010 2011 2012 2013
PRAGATI 5 3 8 5 6
SUNLIFE 3 3 4 1 1
FAREAST 8 3 7 4 7
0.00%
20.00%
40.00%
60.00%
80.00%
100.00%
2009 2010 2011
2012
2013
Operating Margin
PRAGATI
SUNLIFE
FAREAST

45
Investment Yield means how many times it is from investment income. Lower value of
investment yield shows more profitability. Under the heading “Profitability Ratio” if we consider
the investment yields we can say that Sunlife Insurance Company is performing well than rest of
the two companies. Because Sunlife’s investment yield of latest period (2013) is less than others.
Leverage Ratio (Ratio) Debt to Equity
Year 2009 2010 2011 2012 2013
PRAGATI 90.46% 82.67% 119.62% 170.05% 97.10%
SUNLIFE 117% 118% 97.37% 121.94% 113%
FAREAST 90.96% 168.36% 92.39% 138.69% 108.03%
0
2
4
6
8
10
12
14
16
18
20
2009 2010 2011 2012 2013
Investment Yield
FAREAST
SUNLIFE
PRAGATI

46
Debt to equity measures compare to equity what is the liability of a company. It also shows the
future survival the company. Lower value of debt ratio under the heading “Leverage Ratio”
shows solvency of a company. If we consider the debt ratio of these three companies we can
comprehend that Pragati Life Insurance Limited is performing better than the rest. Because latest
period’s (2013) debt to equity ratio of pragati is less than the others.
Conclusion
Under the four headings, we have analyzed ten ratios and we have seen that there is a good
balance among the ratios. Most of the firms have good ratio figure. In case of liquidity
measurement ratios, Sunlife Insurance Company Limited has the very high figure. That means
they retain much cash then need. This way they can reduce the ability of earning. In case of
profitability indicator ratios all of the firms have healthy figure but especially Sunlife Insurance
Company Limited has a very good position. That indicates the firm has high net income. Firms
have good debt to equity indicator ratios. On the other hand cash flow indicator ratios all of the
firms have adequate good figure which refers that all generate enough cash for their activity. Last
0.00%
50.00%
100.00%
150.00%
200.00%
2009 2010 2011
2012
2013
Debt to Equity Ratio
PRAGATI
SUNLIFE
FAREAST

47
of all in case of investment yield, firms have strong ratios. This indicates that all of firms offer
very good amount of investment which they have very good returned though here also Sunlife
Insurance Company Limited has a better positon compare to Pragati & Fareast.

48
References:
a) Pragati Life Insurance Limited’s
Website: http://www.pragatilife.com/
Annual reports of Pragati Life Insurance Limited:
Annual report (2009-2013)
b) Sunlife Insurance Company Limited’s Website:
http://sunlifeinsbd.com/
Annual reports of Sunlife Insurance Company Limited:
c) Fareast Islami Life Insurance Company Limited’s Website:
http://www.fareastislamilife.com/
Annual reports of Fareast Islami Life Insurance Company Limited:
d) Class lectures of FIN 410

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