Annual Report of the selected Companies

(Asia Pacific General Insurance Company, Rupali

Insurance, Bangladesh National Insurance)
FIN410

Prepared for

Quazi Sagota Samina

Assistant Professor
Department of Business Administration
EAST WEST UNIVERSITY

Prepared by

Name ID
Kamruzzaman Pritom 2018-1-10-078
Nazia Ahmed 2018-1-10-228
Sanjida Hossain Jinia 2018-1-10-227
Tawsif Kabir 2018-1-10-028
Easmin Ara Eity 2018-2-10-048

Bachelor of Business Administration

EAST WEST UNIVERSITY
Letter of Transmittal
Quazi Sagota Samina
Associate Professor,
Department of Business Administration
EAST WEST UNIVERSITY
Aftabnagar, Dhaka-1212, Bangladesh

Subject: Term paper on “Annual Report of the selected Companies”

Dear Sir,
It gives us immense pleasure in submitting to you the report on “Annual Report of the selected
Companies”.
While preparing the report, we closely focused on the topic & tried to assimilate and to provide the
most complete information available. We believe that it will provide you a clear scenario of the
conditions of the companies.
We thank you for allowing us to do a term paper. This will definitely give us an experience which we
can use in our professional life. We will be always available for any further queries and to answer any
questions on this report.

Sincerely,
Kamruzzaman Pritom
ID:2018-1-10-078
On behalf of the group
Acknowledgement
We would like to start this report by acknowledging my gratefulness to the Almighty Allah. We
would like to express heartfelt gratitude to my course instructor who has assisted us in the preparation
of this term paper. We would like to take the opportunity to say my gratitude towards, Quazi Sagota
Samina, East West University, for her endless support, inspiration and guidance during the course of
completing this term paper. We are also thankful to her for contributing her valuable time while
viewing our report and making all the necessary corrections.
Executive Summary
In light of this course requirement a report has been prepared about the annual report on the selected
companies.
This report highlights the financial Current Ratio, Cash Ratio, Loss Ration, Expense Ratio, Combined
Ration, Return on Asset, Return on Equity, Net Profit Margine, Investment Yield, Dept to Equity
Ratio, Debt to total Capital Ratio, based on those results from the last 5 years annual report, we have
identified which companies were in good position than others.
Table of Contents
Chapter1 Introduction...................................................................................................................6
1.1 Objective of the Study...........................................................................................................6
1.2 Scope and Methodology of the Study....................................................................................7
Chapter2 Liquidity Analysis............................................................................................................7
2.1 Current Ratio.........................................................................................................................7
Chapter3 Underwriting Analysis....................................................................................................9
3.1 Loss Ratio...............................................................................................................................9
3.2 Loss ratio..............................................................................................................................10
3.3 Expense Ratio......................................................................................................................11
3.4 Expense ratio.......................................................................................................................12
3.5 Combined Ratio...................................................................................................................13
Chapter4 Profitability Ratio.........................................................................................................13
4.1 Return on Asset...................................................................................................................13
4.2 Return on Equity..................................................................................................................16
4.3 Investment Yield:.................................................................................................................17
Chapter5.............................................................................................................................................19
5.1 Leverage Analysis.................................................................................................................19
5.2 Debt ratio:............................................................................................................................19
Chapter1 Introduction
Ratio Analysis is a form of Financial Statement Analysis that is used to obtain a quick indication of a
firm's financial performance in several key areas. It is the scrupulous analysis of the incomes and
expenditures of the company during the certain period of time. The best way to measure income and
expenditure is to count money spent on the products and services and see how much money the
company earned after trading them. The most exact result is observed when different periods of time
are analyzed. In order to keep the finance management of the company professional the process of
ratio analysis is very important. Every manager who wants to control the finance of the organization
and see whether the company gains profit, or the loss of money and resources, should use the method
of ratio analysis constantly. Ratio analysis can be a great tool for companies to benchmark their
performances against the best in the business. If competitors are doing well, analyzing their financial
statements will give an idea as to which areas is the company lacking as against the competitors. This
way, the company can point out weak areas or the areas of improvement. Ratio analysis can also be
used to compare the performance of various departments within the same company. This can be used
by the management to find out the departments that are pulling the overall performance of the entire
company. Although ratio analysis is analyzing past data, it can be helpful in establishing a future trend
based on the belief.
In this report, we have analyzed the ration of Asia Pacific General Insurance Company Limited,
Rupali Insurance, Bangladesh National Insurance from 2016 to 2020. We considered liquidity ratio,
underwriting ratio, portfolio ratio and solvency ratio to compare and contrast the three insurance
companies.

1.1 Objective of the Study

Our primary objective is to focus on a few important areas of the Ration analysis of the last 5 years.
Some other objectives are-

 To present different financial ratios

 To analyze and interpret the ratios
 To identify the problems of the three companies
 To suggest remedial action for improvement of the losing company.

1.2 Scope and Methodology of the Study

To conduct this report, the information has been collected from various sources. The report has been
made from the data of (2016 to 2020) and mostly collected from annual report of the Insurance
Companies. We’ve done this report based on some secondary sources of data such as company’s
annual reports, through web browsing.
Limitations of the Study To make a report various aspects experience are needed. But we faced some
barriers for making a complete and perfect report. These barriers or limitations, which hinder our
work, are as follows: ▪ This is a part of course work. ▪ Difficulty in accessing data of its internal
operations. ▪ Some information was withheld to retain the confidentiality of the organization. ▪ The
time span was not sufficient enough to learn all the activities of the organization properly. ▪ Lack of
co-operation from the data source.
Chapter2 Liquidity Analysis
2.1 Current Ratio
The current ratio is mainly used to give an idea of the company's ability to pay back its liabilities
(debt and accounts payable) with its assets (cash, marketable securities, inventory, and accounts
receivable). As such, current ratio can be used to take a rough measurement of a company’s financial
health. The higher the current ratio, the more capable the company is of paying its obligations. The
formula for calculating a company’s current ratio is
Current Ratio = 𝑇𝑜𝑡𝑎𝑙 𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝐴𝑠𝑠𝑒𝑡/ 𝑇𝑜𝑡𝑎𝑙 𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝐿𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠
The current assets of Asia Pacific General Insurance, Rupali Insurance, and Bangladesh National
Insurance are:

Company Total Current Assets

Name (Amounts in million)

2016 2017 2018 2019 2020

Asia Pacific 965.60 856.65 869.32 886.91 935.80
Rupali 148.52 163.49 197.91 254.37 221.30
Insurance

Bangladesh 972.30 1051.71 992.22 1031.66 1221.40

National
Insurance CO

The current liabilities of Asia Pacific General Insurance, Rupali Insurance, and Bangladesh National
Insurance are:

Company Total Current Liabilities

Name (Amounts in million)

2016 2017 2018 2019 2020

Asia Pacific 407.83 482.65 503.81 495.35 344.96

Rupali 632.60 638.17 640.88 617.20 587.47

Insurance

Bangladesh 262.24 320.75 366.18 381.82 473.64

National
Insurance CO
The current ratio of Asia Pacific General Insurance, Rupali Insurance, and Bangladesh National
Insurance are:

Company Total Current Liabilities

Name (Amounts in million)

2016 2017 2018 2019 2020

Asia Pacific 2.36 1.78 1.72 1.79 2.71

Rupali 0.23 0.25 0.30 0.40 0.37

Insurance

Bangladesh 3.7 3.27 2.70 2.70 2.60

National
Insurance CO

Current Rati o
Asia Pacific Rupali Insurance Bangladesh National Insurance CO
3.7

3.27

2.71
2.7

2.7

2.6
2.36

1.79
1.78

1.72

0.37
0.4
0.25
0.23

0.3

2016 2017 2018 2019 2020

From the above table and graph, we can see that from the year 2016 to 2020, Asia Pacific General
Insurance’s current ratio increased from 2.36 to 2.71, which is the highest in the last 5 years
Rupali Insurance current ratio has increased from 0.23 to 0.37 but according to the rule of thumb even
though they have a very high profitability rate but they have very low liquidity
Bangladesh National Insurance Co current ratio has decreased from 3.7 to 2.60 which means their
profitability has increased.
Comparing the three Companies, Rupali Insurance has the most profitability but they also have the
lowest liquidity, Asia pacific has the highest current ratio of 2.71 which means they have the lowest
profitability among the 3 companies

Chapter3 Underwriting Analysis

3.1 Loss Ratio

By loss ratio, we can see that, what portion has to be paid as claim out of the premium. If a company’s
Loss ratio is higher, it indicates that, the management is inefficient in their underwriting judgment.
Because an efficient underwriter can recognize the risk and can reduce the claim amount. The formula
for calculating the loss ratio is
Loss Ratio = 𝑁𝑒𝑡 𝐶𝑙𝑎𝑖𝑚/𝑁𝑒𝑡 𝑃𝑟𝑒𝑚𝑖𝑢𝑚 ×100
The net claim of Asia Pacific General Insurance, Rupali Insurance, and Bd national Insurance
Company Ltd are given in the following tables:

Company 2016 2017 2018 2019 2020

Name

Asia Pacific 6918307 114782464 111052478 11258329 12355364

General
Insurance
Company

Bangladesh 54023694 532926852 557653018 553648210 56321496

National
Insurance

Rupali 499300000 513580000 513650000 518000000 518540000

Insurance

The net profit of Asia Pacific General Insurance, Rupali Insurance, and Bd national Insurance
Company Ltd are given in the following tables:

Company 2016 2017 2018 2019 2020

Name

Asia Pacific 121569534 12496325 134365932 135246939 138523452

General
Insurance
Company

Bangladesh 107692480 116018860 116932548 123654963 128596325

National
 Insurance

Rupali 208000000 215900000 203850000 181800000 171369528

Insurance

3.2 Loss ratio

Company 2016 2017 2018 2019 2020
Name

Asia Pacific 10.26% 9.18% 8.82% 8.15% 7.89%

General
Insurance
Company

Bangladesh 4.35% 5.03% 4.81% 4.6% 4.3%

National
Insurance

Rupali 2.08% 2.10% 2.5% 2.2% 1.9%

Insurance

Loss Ration
12.00%

10.00%

8.00%

6.00%

4.00%

2.00%

0.00%
2016 2017 2018 2019 2020

Asia Pacific Bangladesh National Insurance Rupali

3.3 Expense Ratio

Expense ratio shows that, from the premium amount how much has to be paid as the underwriting
expense. This ratio also shows the efficiency of the management. Higher the Expense ratio, lower the
efficiency of the management.
The formula for calculating the expense ratio is Expense ratio = 𝑈𝑛𝑑𝑒𝑟𝑤𝑟𝑖𝑡𝑖𝑛𝑔 𝐸𝑥𝑝𝑒𝑛𝑠𝑒/ 𝑁𝑒𝑡
𝑃𝑟𝑒𝑚𝑖𝑢𝑚 ×100
The total Underwriting expense of Asia Pacific General Insurance, Rupali Insurance, and Bd
national Insurance Company Ltd are given in the following tables
 Company 2016 2017 2018 2019 2020
Name

Asia Pacific 118191191 134227745 163280171 185789181 175840972

General
Insurance
Company

Bangladesh 14308957 16650210 14307049 17528035 15578304

National
Insurance

Rupali 107717117 127718637 142511813 142117139 142417130

Insurance

The net profit of Asia Pacific General Insurance, Rupali Insurance, and Bd national Insurance
Company Ltd are given in the following tables:

Company 2016 2017 2018 2019 2020

Name

Asia Pacific 121569534 134963253 134365932 135246939 138523452

General
Insurance
Company

Bangladesh 107692480 116018860 116932548 123654963 128596325

National
Insurance

Rupali 208000000 215900000 203850000 181800000 171369528

Insurance

3.4 Expense ratio

Company 2016 2017 2018 2019 2020

Name

Asia Pacific 66.84% 57.25% 57.64% 65.67% 66.56%

General
Insurance
Company

Bangladesh 73.87% 52.39% 59.17% 52.85% 52.66%

National
Insurance

Rupali 53.86% 61.26% 72.41% 80.37% 85.01%

Insurance
 Expence Ratio
90.00%

80.00%

70.00%

60.00%

50.00%

40.00%

30.00%

20.00%

10.00%

0.00%
2016 2017 2018 2019 2020

Asia Pacific Bangladesh National Insurance Rupali Insurance

3.5 Combined Ratio

Combined ratio shows that, what portion of net premium is spent for net claim and underwriting
expense. Higher management efficiency comes with the lower expense and claim. The formula for
calculating the combined ratio is Combined Ratio = Loss Ratio + Expense Ratio

Combination ratio

Company 2016 2017 2018 2019 2020

Name

Asia Pacific 56.58% 48.07% 48.82% 57.52% 58.67%

General
Insurance
Company

Bangladesh 69.52% 47.36% 54.36% 48.25% 58.36%

National
Insurance

Rupali 51.78% 59.16% 69.91% 78.17% 83.11%

Insurance
 Combined Ratio
90.00%

80.00%

70.00%
60.00%

50.00%
40.00%

30.00%

20.00%

10.00%
0.00%
2016 2017 2018 2019 2020

Asia Pacific General Insurance Company Bangladesh National Insurance

Rupali Insurance

Chapter4 Profitability Ratio

4.1 Return on Asset

Return on Asset shows that, by using total assets, how much profit has been earned by the company.
Higher the ROA, higher the profitability. The formula for calculating the return on asset ratio is-
Return on Asset = 𝑁𝑒𝑡 𝐼𝑛𝑐𝑜𝑚𝑒×100
𝑇𝑜𝑡𝑎𝑙 𝐴𝑠𝑠𝑒𝑡

The net income and the total asset amount of Asia Pacific, Rupali and Bangladesh National Insurance
Company are given in the following tables:

Company Name Net income

2016 2017 2018 2019 2020

Asia Pacific 65793013 97141340 74864326 63313839 64413066

Rupali 269027655 262786667 258887851 255655720 249521065

Bangladesh 143481689 149464676 153346954 108548276 116201385

National
Company Name Total asset

2016 2017 2018 2019 2020

Asia Pacific 1217796280 1348744152 1371395252 1079789644 1146138274

Rupali 858824175 9843851882 10165419902 6599356076 7660468971

Bangladesh 2092167050 215236463 2295026593 1978281771 2049062810

National

The value of the return on asset ratios of Asia Pacific, Rupali and Bangladesh National
Insurance company from the year 2016 to 2020 are given in the following table:

Company Return on Asset Ratio

Name
2016 2017 2018 2019 2020

Asia Pacific 5.40% 7.20% 5.46% 5.86% 5.62%

Rupali 3.13% 2.67% 2.55% 3.87% 3.26%

Bangladesh 6.86% 6.94% 6.68% 5.49% 5.67%

National

From the above tables and graph, we can say that, Asia Pacific General Insurance Company
has the mostly fluctuating ROA but during 2017 it has massively increased. It is quite
interesting that Rupali’s ROA has persistently decreased from 2019 from 2018. On the other
hand, Bangladesh National insurance company’s ROA continuously increased from 2016 to
2020.
Comparing the three companies, Rupali Insurance Company has the lowest return on asset
ratio which indicates that they have lower return than other companies. On the other hand,
Bangladesh National Insurance Company is consistently making higher profit throughout the
last 5 years.
4.2 Return on Equity
The return on equity is a measure of the profitability of a business in relation to the equity.
Because shareholder's equity can be calculated by taking all assets and subtracting all
liabilities, ROE can also be thought of as a return on assets minus liabilities.
Return on equity = Net income / Average shareholder's equity.

Company Net Income

Name
2016 2017 2018 2019 2020

Asia Pacific 65793013 97141340 74864326 63313839 64413066

Rupali 269027655 262786667 258887851 255655720 249521065

Bangladesh 143481689 149464676 153346954 108548276 116201385

National

Company Total Shareholder Equity

Name
2016 2017 2018 2019 2020

Asia Pacific 683379524 740261762 788720323 630720237 657958984

Rupali 5643423731 6412195305 6282764923 4852922641 5692298791

Bangladesh 1607776848 1670945147 1738059924 789525729 814490401

National

The value of the return on equity ratios of Asia Pacific, Rupali, Bangladesh National
Insurance Company from the year 2016 to 2020 are given in the following table:

Company Return on Equity

Name
2016 2017 2018 2019 2020

Asia Pacific 10.04% 2.79% 9.63% 15.01% 9.49%

Rupali 5.27% 4.38% 4.78% 4.10% 4.12%

Bangladesh 13.75% 14.27% 8.92% 8.94% 8.82%

National
From the above tables and graph, we can say that, Asia Pacific General Insurance Company
has fluctuating ROE same as its ROA. The highest ratio 15.01% was in 2017 when equity
was high.
Rupali Insurance Company has similar ROE in the last 5 years. The lowest 4.10% was in
2017. Their ROE is lower than other two insurance company because they use higher debt
than them. Bangladesh National Insurance Company’s ROE has fluctuated in 2019 and 2015.
But from 2016 to 2020 their ROE was consistent.

Comparing the three insurance companies, Rupali has the lowest ROE than other. It gives a
signal that Rupali Insurance Company is making less profit. In contrast, Asia Pacific General
Insurance Company has the highest ROE 9.49% and Bangladesh National Insurance
Company having 8.82% ROE means they both have higher profitability.

4.3 Investment Yield:

This ratio shows the comparison between investment income and investment, how much the
investment has earned over the years. Here, low investment yield indicates higher
profitability like the income earned from the investment is more time greater than the actual
investment amount.

The formula is given below:

Investment
Investment Yield:
Investment Income

Company Name Investment

2020 2019 2018 2017 2016
Asia Pacific 330563688 29221503 291660533 285348324 278671030
3
Bangladesh 89229146 89655577 79090622 83728157 60616496
National
Rupali 157729977 12826194 103671041 133125838 129368264
5

Company Investment Income

Name 2020 2019 2018 2017 2016
Asia Pacific 44597467 71549538 45449353 103205019 56916164
 Bangladesh 78411331 79276358 74601695 53707918 60061616
National
Rupali 77452850 92246744 88781048 70296320 78039473

Compan0y Investment Yield

Name 2020 2019 2018 2017 2016
Asia Pacific 7.41 times 4.1 times 6.42 times 2.8 times 4.9 times
Bangladesh 1.13 times 1.13 times 1.06 times 1.56 times 1.01 times
National
Rupali 2.04 times 1.4 times 1.2 times 1.9 times 1.7 times

Investment Yield
8 7.41
7 6.42
6
4.9
5
4.1
4

3 2.8
2.04 1.9
2 1.56 1.7
1.4
1.13 1.13 1.06 1.2 1.01
1

0
2020 2019 2018 2017 2016

Asia Pacific Bangladesh National Rupali

Here, we can see that for Asia Pacific Insurance Company Ltd., Investment yield is the
highest in the year of 2020, which shows lower profitability of the company, the income
generated from investment is much lower compared to the actual investment amount. Among
last 5 years, the profitability was highest in the year of 2017 where yield was 2.8 times much
lower compared to other years.
Bangladesh National Insurance Company has maintained a consistency in terms of earning
investment income over the years and the investment yield is also low which indicates high
profitability over last 5 years. Highest profitability has earned by the company in the year of
2016, when investment yield is only 1.02 times to its investment.
In 2020, the investment yield was about 2.04 times to its investment which is higher than
other four years. The profitability was highest in the year of 2018 and on 2017, the
profitability was slightly decreased.

Among these three companies, Bangladesh National Insurance Company earned higher
profitability and are in better position by maintaining a consistent investment yield over the
years which is much lower than other two company.

Chapter5
5.1 Leverage Analysis
Through leverage analysis, it is identified that to what extent a company is depending on its
borrowing sources. A company’s leverage is measured by debt ratio.
5.2 Debt ratio:
This ratio shows that out of total assets what portion has financed by liability sources. Higher
debt ratio indicates more dependency on liabilities which also indicates high risk for a
company. The formula of calculating debt ratio is given below:

Total Liabilities
Debt Ratio = × 100
Total Asset

Company Total Liabilities

Name 2020 2019 2018 2017 2016
Asia Pacific 87635019 92656921 158448373 141705658 95309601
Bangladesh 532655161 396827959 367468889 331055836 269599111
National
Rupali 425744839 409496494 434767758 430355139 428353966

Company Total Assets

Name 2020 2019 2018 2017 2016
Asia Pacific 1286858478 1242007473 1310885317 1297661542 1217796280
Bangladesh 1585014008 1388784605 1326379183 1236001700 1123395957
National
Rupali 2440359638 2428734725 2345984696 2284404659 2210671459

Company Debt Ratio

Name 2020 2019 2018 2017 2016

Asia Pacific 6.82% 7.46% 12.09% 10.92% 7.83%

Bangladesh 33.6% 28.6% 27.7% 26.78% 23.998%
National
 Rupali 17.45% 16.86% 18.53% 18.84% 19.38%

Debt Ratio
40.00%

35.00% 33.60%

30.00% 28.60% 27.70% 26.78%

25.00% 24.00%

18.53% 18.84% 19.38%

20.00% 17.45% 16.86%
15.00% 12.09%
10.92%
10.00% 7.46% 7.83%
6.82%
5.00%

0.00%
2020 2019 2018 2017 2016

Asia Pacific Bangladesh National Rupali

From the graphical explanation, we can see that the debt ratio of Asia Pacific Insurance
Company was lowest in 2020, 6.82% which indicates that the company has controlled its
dependency on liabilities compared to its last four years. It was highest in the year of 2018,
about 12% which shows higher portion of assets was financed through its liabilities sources.
The good thing is that, in all the five years the company was in safe position as the liability
amount was much lower compared to the asset. It is showing that the company has financed
through its own equity over the last five years.

The debt ratio of Bangladesh National Insurance Company is highest for the year of 2020,
also over the years, their liabilities is increasing which was financed through more portion of
the assets. The company is not at risky position as the debt ratio is under limit and the
company is successfully servicing its own debt. Compared to other years, the ratio was lowest
in the year of 2016 when the company had less liabilities compared to its assets.
We can see that Rupali Insurance Company is maintaining a good debt ratio over the years.
The debt ratio was in between (17-20) % over the last five years. It was highest in the year of
2016 and lowest in the year of 2019. The company is in good position in terms of paying its
liabilities.
From these three companies, Asia Pacific Insurance Company is in better position in terms of
debt ratio than other two company, though others are also in good financial position