Chapter 1

Introductory part

1.1. Introduction
Insurance is a system of spreading the risk of one to the shoulders of many. It is a contract
whereby the insurers, on receipt of a consideration known as premium, agree to indemnify
the insured against losses arising out of certain specified unforeseen contingencies or
perils insured against. The insurance sector plays an important role in the service-based
economy and its services are now being integrated into wider financial industry. Insurance
is not a new idea or proposition to the people of Bangladesh. In Bangladesh insurance
companies act as financial intermediaries. Insurance companies (both private and public)
consisting the organizations which provides life, fire, accident, causality and many other
forms of insurance. This study attempts at focusing on structure of investment portfolio of
different general insurance companies of Bangladesh and tries to focus to the cause effect
relationship between the structure of investment portfolio and profitability of insurance
companies in Bangladesh.

1.2. Objective of the study

The primary objective of the study is to meet the partial requirements for the fulfillment of
MBA program. The core objectives of the study are as follows:

 To have an idea about the insurance sector of Bangladesh.

 To identify the areas in which the insurance companies mainly invests.
 To find out the structure of investment portfolio of general insurance companies in
Bangladesh.
 To know whether the investment portfolio composition of general insurance
companies shifted over time
 To determine the relationship between the profitability and risky investment of
insurance corporations.

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Introductory part

1.3. Rational Of the study

As the crucial mainstay for insurance industry to survive and develop, the insurance
investment enables insurance companies to offset their possible underwriting losses and
make a considerable profit. Therefore Bangladesh insurance industry is embracing with
greater opportunities. Based on the analysis of insurance investment vehicles, this paper
focus on cause effect relationship between the structure of investment portfolio and
profitability of insurance companies in Bangladesh.

1.4. Scope of the study

This paper covers the investment portfolio of general insurance companies in Bangladesh.

 Regional Scope
I have actually emphasized on the current status, investment portfolio, asset mix of an
insurance company’s investment portfolio of general insurance companies in Bangladesh in
this report.

 Periodical Scope
This report covers the period from 2005 to 2012. Besides, the report also shows statistical
& graphical information of general insurance company’s total investment since 1999.

 Institutional Scope
This report considers 43 general insurance companies (Listed & non-listed) operating in
Bangladesh.

 Analytical Scope
In this report, historical information of the general insurance companies in Bangladesh is
presented. Report mainly emphasize on many graphs in this report based on the time
series analysis .This report also contains the analysis of the impacts of risky investment of
general insurance companies of Bangladesh on profitability of those companies, whether
investment in shares affects the overall profitability of the companies or not based on
various statistical tools.

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Introductory part

1.5. Structure of the report

The organization of the report is as follows:

Chapter 1 presents very brief background about the study, objectives of the study, rational
of the study, scope of the study and structure of the report.

Chapter 2 deals with literature review of different scholars across the world and the
results of their studies done with different methodologies.

Chapter 3 provides the methodology of the study. Scope of the data, sample size,
techniques used in the report is included in this chapter.

Chapter 4 represents overview of general insurance company in Bangladesh. Its history,

present condition, future prospects are scrutinized in this chapter.

Chapter 5 reflects background of insurance company’s investment in Bangladesh, different

types of investment vehicles, graphical presentation of proportion of investment by
insurance companies, and last of all analysis of investment portfolio.

Chapter 6 reports on trend in investment asset category, whether the investment portfolio
composition of general insurance companies shifted over time and also impact of risky
investment on profitability of insurance company, whether investment in shares affects the
overall profitability of the companies or not.
Chapter 7 represents the conclusion which includes the findings of the report &
recommendations