Federal Insurance Company LTD
Federal Insurance Company LTD
!. Miscellaneous:
Cash on counterDcash on transit
Burglary cash in safe
Comment: 9rice defers o tariff and also depends on policy taker. 9olicy taker could be divided in
t(o (ay policy in above (e can see.
Pricing element:
Fire"
). Deceleration
*. Tariff
Marine (cargo) and ull:
). ?oods and packaging
*. "isk and amount
+. 9ort and destination
Pricing process:
There are t(o types of pricing process fire and marine
Claim settlement:
). 9arty provide information through phone or (riting
*. ?eneral diary E ?DF in local police station in terms of non marine insurance
+. Assigning a survey company to assess the loss
-. "eport submission of surveyor and bill payment of surveyor
0. Claim settlement@ claim department settle the claim after getting the report of surveyor.
The #D Emanaging directorF can issue claims amounting up to t(o lacks of the claim
more than t(o lacks and approval of e,ecutive board meeting is needed.
Mar'eting techni1ues:
). Assigned a target to branch manager@ 5alesman contacts (ith branch manager ho( many
contract they could sale and their salary depend on their sale.
*. Through agent@ Agents (ill get commission through sale policy.
+. Advertisement@ 9olicy can be sale in different (ay$ such as print media$ bill board and
sponsorship of program.
4e insurance management:
There is a certain retention portion of claim settlement ability of the company.
The over retention portion is reinsured in general insurances corporation Eshadharon bima
corporationF. The shadharon bima corporation also re insure their over retention portion to the
foreigners and diving fifty percent of their premium and risk among the listed general insurance
companies.
Performance ,nalysis
4atio ,nalysis:
Cear *<<0 *<<1 *<<2 *<<3 *<<4
Current "atioEJ@)F ).- ).01 ).-0 ).-* ).-0
Acid Test "atioEJ@)F ).*3 ).+) ).+- ).+* ).+0
Interpretation: The graph sho(s that though the ratio of current and liquid assets ! liabilities
of %ederal nsurance Co. Current "atio is higher in *<<1 among the last five years$ but the acid
test ratio is quite stable of %ederal nsurance Co. Though there is no significant difference in last
0.
-rend ,nalysis
.et Premium Income
%igures are in #illion Taka.
<ear 677; 677? 677: 677B 6779
Net 9remium ncome 42.20 43.+1 )*3.-- )+1.+* )03.4-
Interpretation: The total premium paid by a policyholder after any ta, relief or discount is
taken into the Net 9remium ncome. The Net premium ncome of %ederal nsurance Company in
*<<4 is more than the previous years. n *<<1 the percentage of gross premium is lo(er.
*PS
%igures are in Taka.
<ear 677; 677? 677: 677B 6779
:arnings 9er 5hareE:95F )*.<) +.-3 )).)* )<.)< )*.40
Interpretation: The portion of a company/s profit allocated to each outstanding share of
common stock. :arnings per share serve as an indicator of a company/s profitability. The earning
per share of %ederal insurance company is increasing in the last though dropped in *<<1 and
higher in *<<4 among the last five years.
Profit &efore -a+
%igures are in #illion Taka.
<ear 677; 677? 677: 677B 6779
9rofit Before Ta, 2.4+ *.0+ )*.*2 )1.+< **.<2
Interpretation: The 9rofit before any ta, relief or discount is 9BT. The 9BT of %ederal
insurance Company in *<<4 is more than the previous years. n *<<1 the percentage of 9BT is
lo(er.
4ate of )i"idend
<ear 677; 677? 677: 677B 6779
"ate of Dividend )<H )*H )*H )<H )*H
Interpretation: The rate of dividend remains almost same e,cept last year. t fluctuates
bet(een )<6)* H
-otal ,ssets
%igures are in #illion Taka.
<ear 677; 677? 677: 677B 6779
Total Assets -2<.-4 0<+.+) 0*4.-4 01<.)< 030.2+
Interpretation: The total asset of %ederal nsurance Co. is gradually increasing highest in *<<4
among last 0 years and in increase.
.et Claims
<ear 677; 677? 677: 677B 6779
Net Claims )*.*) )0.4- )1.-2 )).4- )2.2*
Interpretation: The Net Claim of %ederal nsurance Co. is highest in *<<4 among last 0 years
and in lo(est in *<<3.
.umber of &ranches
<ear 677; 677? 677: 677B 6779
Number of Branches ++ ++ ++ +* *4
Interpretation: The number of branches of %ederal nsurance Co. is gradually decreasing lo(est
in *<<4 among last 0 years and in decrease.
Share Price
%igures are in Taka.
<ear 677; 677? 677: 677B 6779
5hare 9rice 3< 4< )00.0 *3).0 02-.20
Interpretation: The 5hare of %ederal nsurance Co. is gradually increasing highest in *<<4
among last 0 years and in increase.
Common Size Statement Analysis:
C,PI-,L / LI,&ILI-I*S 6779 677B 677: 677? 677;
5>A":>8;D:"5/ :OUTC <.*1 <.*0 <.*0 <.*0 <.*-
BA;ANC: 8% %UND5 <.<4 <.)< <.)< <.<3 <.<3
:5T#AT:D ;AB;T:5 <.<0 <.<0 <.<0 <.<0 <.<2
A#8UNT DU: T8 8T>:" 9:"58N5<.-< <.+1 <.+- <.+* <.*1
5UND"C C":DT8"5 <.)+ <.)4 <.*) <.*+ <.+<
;8AN5 AND AD7ANC:5 <.<1 <.<- <.<+ <.<+ <.<*
9remium Deposit Account <.<) <.<) <.<* <.<- <.<+
-otal 8.77 8.77 8.77 8.77 8.77
P4OP*4-< / ,SS*-S:
P4OP*4-< / ,SS*-S 6779 677B 677: 677? 677;
N7:5T#:NT EAT C85TF <.<) <.<) <.<) <.<) <.<)
8UT5TANDN? 9":#U# <.)* <.)* <.)) <.)) <.))
NT:":5T$ D7D:ND ! ":NT <.<) <.<) <.<) <.<) <.<)
A#8UNT DU: %"8# 8T>:" 9:"58N5<.*- <.)- <.)0 <.)0 <.)1
5UND"C D:BT8"5 <.+< <.-0 <.-1 <.-3 <.-3
CA5> AND BANB BA;ANC:5 <.*1 <.*< <.)3 <.)0 <.)-
8T>:" ACC8UNT5 <.<1 <.<2 <.<3 <.<4 <.<4
-otal 8.77 8.77 8.77 8.77 8.77
Scenario ,nalysis:
Cear *<<1 *<<2 *<<3 *<<4 *<)<J
Net 9remium 43$+01$4-) )*3$--)$<01 )+1$+)1$4** )03$4+1$330 )3-$+11$231
U.&. 9rofit *)$-+)$)04 *0$-<-$)1* +0$<*-$+)< -+$0*-$24- 0+$42<$2-0
Assets -*$343$4)3 -<$12<$40< -)$11+$-)+ +3$*4*$3-1 -<$33)$0+)
5hare Capital 2*$1<<$<<< 3)$+)*$<<< 4)$<14$-<< )<<$)21$+<< )<1$1+*$23<
JAssumed
Sensiti"ity ,nalysis:
I-*M In 6779 If (ross
PremiumF;G
If (ross Premium
C;G
If .et Claim
F;G
If .et Claim H
;G
?ross
9remium *034)22)1 *2)31+1<* *-042)3+< *034)22)1 *034)22)1
Net premium)034+1330 )2)33*22) )-044<444 )034+1330 )034+1330
Net Claim )22*)433 )22*)433 )22*)433 )31<3<32 )13+0334
U.&. 9rofit -+0*-24- 01-2<13< +<0234<3 -*1+3140 ---)<34+
Interpretation: The ?raph sho(s that$ changing in claim and premium doesn/t impact
tremendously on profit.
Cross Sectional ,nalysis:
CompanyIs .ame Federal Ins. Peoples Ins. (reen )elta
Ins.
Pheni+ Ins. @nited Ins.
Net 9rofit **<2<<<< -0+4<<<< *2210)0<1 20-13443 2-*1<<<<
Net 9remium )034-<<<< *)2<-<<<< 2*114<<<< *1<)3333* )<-)-<<<<
nvestments 01)*23+ -32+<3003 )3+0+-<<<< ))<0+2<)* **1+<4++)
Total "eserve +1+2-+13 )-3*)<<<< *<4-24<<<< )-*00*311 *2-00<<<<
:95 )*.40 ++.)2 01.44 *0.)1 *).+)
Total Assets 0302*1<4< 242-)<<<< +-++<211)< 1424<-1)3 2*1<<<0)*
Total ;iabilities 0302*1<4< 242-<2<*0 )*4++*)-1< )<*+2**+++ 2*1<<<0)*
%rom the above cross sectional analysis (e have found that$ %ederal nsurance Company is in
fifth position as the capital and business si.e is smaller.
Share price "aluation
The dividend of the company for the last fe( years are given belo(6
Calculation of the gro$th rate 2g3:
gG 6)
gG
gG<.<40
Calculation of )6788:
D*<)<JE)PgF
G)*JE)P<.<40F
GTk.)+.)-
9rice of the share G
GTk.)*0.)-
Commen t@ The share price is 'ustifiedL the market price of the share is Tk.)*0.-. The main
reason behind this situation is the reserve fund of progressive general insurance company.
<ear 677B
2)=3
6779
2)>3
6787
2)>3
)i"idend
G
)< )* )*
Company ,nalysis
SOA- ,nalysis
S Strength
O Opportunity
A Aea'ness
- -hreat
Strength:
)F n case of premium earning this company is on )<
th
position among all of the insurance
companies E-+companiesF in Bangladesh.
*F Claim paying ability.
+F t has bank investment.
-F Under(riting profit is in a stable position.
0F &ide distribution net(ork.
Opportunity:
)F ;ocation of the head office.
*F :,pansion of market country (ide.
+F ncreased demand of insurance ! re Kinsurance.
-F nvestment opportunity.
0F "ate of tariff is fi,ed by the C"C.
Aea'ness:
)F ;ess capital.
*F The company can/t computeri.e the total net(ork still no(.
+F No advanced training facilities.
-hreat:
)F Unhealthy competitive market.
*F Turnover rate is high.
Situation ,nalysis:
Porter#s $ forces on insurance industr%
nsurance industry in Bangladesh is running on by small number of quality producers. %ederal
insurance company is one of the largest of all companies in the industry. t has e,treme
reputation ! brand image as (ell. %ive forces of this are the follo(ings6
-hreats of ne$ entrants is lo$ becauseC
)F :conomies of scale are too much high.
*F Ouality of product is almost outstanding.
+F >uge amount of capital is required.
-F 5hortage of proprietary skills or technology.
-hreats of substitute are lo$ becauseC
)F As it is not highly profitable$ there e,ists lo( threat.
*F The satisfaction of substitute product price performance is poor.
Po$er of supplier is high becauseC
)F 5ubstitute for their policies is not available.
*F 9rovider can for(ard integrate because it might be profitable.
+F There is some small no. of friendly institutions in the industry.
-F Their offers are highly profitable.
0F :ntering bet(een them is very costly.
Po$er of buyer is lo$ becauseC
)F nsurer avoids high volume of insured amount.
*F 9olicy can be in different forms.
+F nsurer al(ays for(ard movingQ.
IntraCindustry ri"alry is lo$ becauseC
)F The area of market is very large.
*F ndustry is gro(ing ! yet to attain at maturity.
+F %i,ed costs are high$ revenue also very high to services make up it.
-F The standard of the insurance services is different from company to company.
Findings, 4ecommendation / Conclusion
Finding form Performance ,nalysis
%rom the various financial analyses$ there are some ma'or findings as follo(s@
The current ! acid test ratio is good and reliable.
The 5hare 9rice is 'ust follo(ing the share value$ no over value or under value.
The no of branches are in decrease for various obstacles and for the challenges from the
competitors.
"ate of dividend is lo(er than other companies and stable.
"ate of premium collection and market share is good$ )<
th
in position in terms of premium
collection.
:95 is not bad.
These are the basic findings from the analysis of the financial information of this company.
,lternati"e Strategies / 4ecommendation
The Company must be fully computeri.ed as early as possible.
Ne( strategy has to be taken to improve the sales and performance.
:fficient employees should be appointed.
Different portfolio investment can be increased.
#oderni.ation of office setup.
These steps could be taken to improve the condition of the company according to our short vie(.
Conclusion:
7isiting nsurance Co. (as totally ne( for us. &e have found that$ the practical kno(ledge of
insurance is more important and a bit different then the bookish kno(ledge. #aking this report
helped us to gain valuable practical kno(ledge and skills. The %ederal insurance company is one
of the oldest private general insurance companies. The main feature of this company in our vie(
is that$ ma,imum portion of their profit comes from the under(riting profit that means insurance
business$ not from investments. f the recommended steps are taken as early as possible$ (e
strongly believe that$ they (ill come to the top most positions very shortly in this sector.
&ibliography
&oo's:
). Elements of &nsurance' A.i.ul >uq Chaudhri
*. &nsurance Principles ( practices' #.N #ishra
4eports and articles:
). Annual "eport of the Company
*. Daily Ne(spapers and financial publications
*ncyclopedia / )ictionary:
). 8nline :ncyclopedia
*. 8nline Dictionary
Aebsite or Aebpage:
). http@DD(((.google.comD
*. http@DD(((.federalinsu6bd.comD
http@DDdse.com.bdD
Consulted:
). #r. 5hahinur 5obhan
Assistant 9rofessor
Department of Business Administration
Dhaka City College
#anaging Director$ C:8@
A B # 5ar(ardy Cho(dhury
Senior *+ecuti"e #ice President:
5imul Banti Barua