Product and Performance Evaluation of-Sandhani Life Insurance & Northern General Insurance Company Ltd

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Product and Performance Evaluation of-Sandhani Life Insurance & Northern General Insurance Company Ltd.


The business of insurance is gradually expanding in this country,but the corresponding knowledge to conduct and regulate the business of insurance on sound footing is not.One of the reasons could be the lack of technical knowledge which necessitates easy availability of authoritative reading materials.This is one front where we are lacking far behind.

Insurance is nothing but a system of spreading the risk of one onto the shoulders of many.Whilst it becomes somewhat impossible for a man to bear by himself 100% loos to his own property or interest arising out of an unforeseen contingency,insurance is a method or process which distributes the burden of the loss on a number of persons within the group formed for this particular purpose.

Although not in the present day from of insurance.the concept of such a philosophy of grouping together or risk sharing developed in very ancient times.We can probably go back to 4th century which witnessed the practice of BOTTOMRY BONDS and RESPONDENTIA BONDS in maritime trade.Another practice which is still in existence is known as GENERAL AVERAGE which has in itself the element of sharing the loss of one by all.It is very old custom and can be traced back to 916 B.C. during the time of Rhodians.

“Sandhani Life Insurance Co.Ltd”

1. Profile

”Sandhani Life Insurance Company Ltd. Was in corporated on 1990 as a public Ltd. Company under the section on 184 of the companies Act 1994.SLIC underwrites risks in Ordinary life Insurance,Greha sanchay,Takaful, IDPS, GIDPS & ISB,DPS &GDPS and Group Insurance.

Notice is hereby given that the 17th Annual General Meeting of the Shareholders of Sandhani Life Insurance Company Ltd.was held on 19-08-2007,Sunday at 10:30 a.m at LGED Auditorium,Level-2,LGED Bhaban,Shere-Banglanagar,Agargaon,Dhaka-1207 to transact the following business:

1. To receive & adopt the Directors ‘Report & Audited Accounts for the year ended on 31st December 2006 and the Auditors’ Report thereon.

2. To declare Dividend (Bonus Share) for the year 2006 as recommended by the Board of Directors.

3. To consider appointment of the Auditors for the year 2007 and to fix their remuneration.

4. To elect Directors.


1.The Register of Shareholders and the Register of Transfer of Shares of the Company will remain closed on 30-07-2007 as ‘Record Date’.On that date no share transfer will be effected.

2.A member entitled to attend and vote at the General Meeting is entitled to appoint a proxy to attend the meeting and vote on his/her behalf.

3. The proxy form must be affixed with revenue stamp of tk.8.00 and should be deposited at the Registered Office of the Company not later than 48 hours before the time fixed for the meeting.

4.The Board of Directors have recommended dividend in the from of Bonus Share at the rate of 20 shares for every 100 shares held by the shareholders (20:100) on the paid up capital of tk.4,76,06,400 for the year ended December 31,2006.

5. Members are requested to notify change of address,if any,to the Company.

6. Admission to the Meeting Venue will be on production of the attendance slip with the Notice.

2. Product name with Description

Type of Products:

Sandhani Life Insurance Company Limited is carrying out the Following types of insurance/re-insurance business:

1. Ordinary life Insurance: What makes ordinary life insurance different from term life insurance? An ordinary life insurance policy is a combination of a term insurance policy and a “savings account.” The policy owner pays a level premium, which is usually higher in the early years, and excess amounts are used to fund the savings account (also known as the cash value). Ordinary life insurance allows the policy owner to choose one of the following options, even if the insured doesn’t die.

  • receive some of the premium back in the form of a low-cost policy loan
  • surrender the policy for cash
  • receive a reduced life insurance benefit at death
  • continue the current life insurance benefit for a reduced time period

Types of Ordinary Life Insurance:

a) Universal life insurance.

b) Variable Universal Life.

c) Death Benefit at Low Cost.


2. Greha sanchay: In view of the growing share of services in the gross domestic product, the government is planning to introduce a services price index on the lines of the present wholesale and retail commodity price indices.

3. Takaful, IDPS, GIDPS & ISB: One kind of insurance in sandhani life insurance company.

4. DPS &GDPS: One kind of insurance in sandhani life insurance Company.

5. Group Insurance: Group insurance is an insurance that covers a group of people, usually who are the members of societies, employees of a common employer, or professionals in a common group.

Group insurance may or may not be converted to individual coverage. As group insurance gets big business for an insurance company with minimum operational expenses (under one master policy issued to an employer, union or any recognized group), it is usually less expensive than individual policies.

3. Product Performa

The Product Performance is given to the below:

a) Ratio Analysis: For making ratio analysis at first we need product price.but we don’t found any product price.Because we don’t know what is the price of our life & that’s why we can’t make ratio analysis.

b) Pointing Financial Condition of That Company:

The financial highlights and the break-ups of the premium income were as follows:


Premium Income 2006 2005 2004

First Year Premium: 66.10 63.16 38.46

Ordinary Life 12.50 12.12 8.24

Greha sanchay 8.12 8.44 5.32

Takaful, IDPS,

GIDPS & ISB 24.83 25.46 15.50

DPS & GDPS 20.65 17.14 9.40

Renewal Premium: 68.77 48.73 32.08

Ordinary Life 22.69 21.68 18.5

Greha sanchay 11.15 7.51 5.2

Takaful, IDPS & ISB 20.26 11.32 4.3

DPS & GDPS 14.67 8.223.97

Group Insurance 0.32 0.23 0.08


Total Premium = 135.19 112.12 70.62


Management Exp: 70.69 59.60 37.64

Commissions 52.16 45.81 27.9

Admin Expenses 18.53 13.79 9.6

Life Fund: 165.72 110.25 70.14

c) Consider Last Five Year’s Financial Condition: Given to the below:

Financial Glimpses of SLIC

FY2002 FY2003 FY2004 FY2005 FY2006
Paid-up capital 3.00 3.00 3.42 3.97 4.76
First year premium 15.73 26.64 38.46 63.16 66.10
Renewal premium 18.77 24.56 32.08 48.73 68.77
Group Insurance premium 0.03 0.03 0.08 0.23 0.32
Gross premium 34.53 51.23 70.62 112.12 135.19
Investment income 2.04 2.81 4.15 6.03 10.93
Claims 10.12 11.36 14.85 15.90 16.24
Management Expense: 16.76 26.75 37.64 59.60 70.69
Commissions 11.65 19.75 27.95 45.81 52.16
Admin Expenses 5.11 7.00 9.69 13.79 18.53
Assets 48.05 66.83 96.68 139.04 197.95
Life Fund 30.66 46.44 70.14 110.25 165.72
Dividend/Bonus Share 12% 14%(BS) 16%(BS) 20%(BS) 20%(BS)

Report 02 (General Insurance)

“Northern General Insurance Co. Ltd.

1. Profile

Northern General Insurance Company Limited (NGICL) was incorporated on April 8, 1996 as a public limited company under the Companies Act,1994 and licensed under the Insurance Act,1938 in order to run all types of general insurance business other than life insurance business. It obtained certificate of commencement of business on April 8,1996 with an authorized and paid up capital of Tk.250 million and Tk.60 million respectively. It got registered with the Department of Insurance on 25th May 1996.Northern General Insurance Company has its presence in Dhaka and Chittagong division. As on 31st December 2007, the Company has been operating its business through 22 branches along with one local office. Among the branches,17 are in Dhaka division and 5 are in Chittagong division located in different strategically important areas of the city.

Important dates:

Incorporation of the Company April 8, 1996

Date of Certificate of Commencement of Business April 8, 1996

Registration under the Department of Insurance May 25, 1996

Northern General Insurance Company Limited is licensed under Insurance Act, 1938 in order to run all types of general insurance business other than life insurance business. Like most of the general insurance companies in the industry, NGICL underwrites risks in fire, marine, motor and miscellaneous business areas.

2. Product Name with Description

Type of Products: Northern General Insurance Company Limited is carrying out the Following types of insurance/re-insurance business:

1. Fire Insurance Business: A fire at a business can devastate a business. The structure may be damaged beyond repair. Business revenues are disrupted as the business cannot remain open. In the United States in 2006 there were 1.6 million fires reported resulting in $11.3 billion in direct property loss. It is a risk that must be insured against.

Most property insurance policies and business owner policies cover fire losses. Most business property insurance policies are broad form policies. These policies list a number of perils that are covered by the policy and exclude perils that are not covered.

However, fire insurance can be purchased as a specific peril policy or the coverage increased by a specific endorsement. It is important for the business owner to understand what is not covered under a traditional broad form policy and ways to increase coverage. It is important to review what appropriate considerations when reducing premiums are and what not effective ways to save premiums are.

2. Marine Insurance Business: The statistical records of marine underwriting are rarely brought to the notice of the public. Unlike life and fire insurance, the business, though an important one is limited in its extent. Men engaged in every occupation insure their lives and property as a means of protection in case of death or fire; but marine policies are taken out by those only who own vessels or who export or import merchandise.

3. Motor Insurance Business: By law any vehicle used on the road or other public place must be covered by a motor insurance policy. If you, your employees or anyone else working for your business uses a vehicle for work then you should check that:

  • all vehicles owned by your business are covered by appropriate insurance
  • any employees’ vehicles used for or in connection with business have their insurance extended to cover use for their employer’s business
  • any personal vehicle insurance that you may have covers business use

You should also make sure that the cover provided by the policy is appropriate as there are different classes of business use. For example, traveling sales people or commercial representatives are considered differently from those making only occasional business trips.

If you own several vehicles you may be able to get fleet cover that might offer better terms. Your insurance broker will be able to advise you on this.

You need to check the licenses of all your drivers and advise your insurers of any motoring convictions. Otherwise, you will not be insured. You will also need to tell insurers of any motor convictions that happen after insurance is in plan.

4.Miscellaneous Insurance Business: With the increase in public awareness and consequent thrust of the Insurance Industry in the areas of Health Insurance, Liability Insurance and other personal lines of insurances, the miscellaneous portfolio of Insurance is poised to be the sunrise portfolio of General Insurance business. This programme has been designed keeping in mind these developments in the market and attempts to address the need for increased awareness of the multidimensional miscellaneous portfolio.


  • To enhance the participants understanding of the miscellaneous portfolio
  • To acquaint them with various aspects of Health and Liability Insurance in context with the Current scenario
  • Help them explore the potential of rural insurance in line with the regulatory guidelines.
  • To emphasize the importance of and explore the potential of personal line of business under miscellaneous portfolio.


  • Analysis of the miscellaneous insurance products
  • Health Care Management – Indian and Global Perspective
  • TPA’s an Effective Service Provider
  • Legal framework and Liability Insurance Products
  • Rural and Social Sector – regulations, product and marketing
  • Personal line products – potential and marketing, distribution channels
  • Scope and Coverage of New Products
  • Credit Default Cover
  • Bankers Indemnity Insurance/ Jewelers Block Covers; Stock Brokers / Insurance Brokers Indemnity
  • Packaging & Product Development
  • Special Contingency Covers

The Company operates its business through the Head Office at Dhaka and the branches throughout the country. As on 31st December 2007, the Company has been operating its business through 22 branches along with one local office. Among the branches, 17 are in Dhaka division and 5 are in Chittagong division.

3. Product Performance

a) Ratio Analysis.Given to the below:

Name of Ratio 2007 2006 2005 2004 2003
Computation Result Computation Result Computation Result Computation Result Computation Result
Liquidity Ratios
Current Ratio 284,362,289 1.59 274,317,966 1.62 252,168,712 1.58 261,969,017 1.46 254,957,769 1.38
179,150,870 169,521,198 159,957,443 179,780,107 184,742,743
Quick Ratio 259,399,922 1.50 254,059,555 1.55 240,163,889 1.55 253,443,971 1.43 247,762,014 1.37
172,527,109 163,462,095 154,645,053 177,567,317 180,631,668
Times Interest Earned Ration Not Applicable
Debt Equity Ratio Not Applicable
Operating Ratios
Accounts Receivable Turnover Ratio 179,362,140 3.97Times 189,309,329 3.71Times 183,409,276 5.51Times 165,881,667 6.64Times 134,155,063 4.66Times
45,234,591 51,084,581 33,297,727 24,999,684 28,796,906
Inventory Turnover Ratio Not Applicable
Asset Turnover Ratio 179,362,140 0.57 189,309,329 0.63 183,409,276 0.67 165,881,667 0.58 134,115,063 0.48
312,217,282 299,042,806 275,585,081 285,646,052 278,491,115
Profitability Ratios
Gross Margin Ratio 20,940,489 11.67% 16,706,519 8.82% 12,009,223 6.55% 20,298,797 12.24% 5,363,635 4.00%
179,362,140 189,309,329 183,409,276 165,881,667 134,115,063
Operating Income Ratio 17,529,035 16.82% 11,741,571 9.30% 8,288,474 7.23% 15,321,351 15.15% 2,725,646 3.29%
104,239,334 126,261,130 114,601,456 101,131,854 82,907,494
Net Income Ratio 12,319,581 11.82% 9,211,764 7.30% 4,364,256 3.81% 11,437,466 11.31% 2,725,646 3.20%
104,239,334 126,261,130 114,601,456 101,131,854 82,907,494
Return on Assets Ratio 17,529,035 5.74 11741,571 4.09% 8,288,474 2.95% 15,321,351 4.43% 2,725,646 1.00%
305,630,044 287,313,944 280,615,566 282,068,583 272,220,190
Return on Equity Ratio 17,529,035 13.17% 11,741,571 9.07% 8,288,474 7.17% 15,321,351 14.47% 2,725,646 2.91%
133,066,412 129,521,608 115,627,638 105,865,945 93,748,372
Earning per Share 7,319,581 12.20 5,211,764 8.69 3,164,256 5.27 10,237,466 17.06 1,525,646 2.54
600,000 600,000 600,000 600,000 600,000

b) Pointing Financial Condition Of That Company: Given to the below:

Financial structure

1. Financial Structure prior to IPO

Issued, subscribed and paid up capital as on date Tk 60,000.000


2. Financial structure after IPO

a) Issued, subscribed and paid up capital as on date Tk 60,000,000

b) IPO (Initial Public Offering) Tk 90,000,000


Total capital structure after IPO will be Tk 150,000,000


Plan of Operation and Discussion of Financial Condition

Internal and external sources of cash

(As per audited accounts)


Amount in Taka


Amount in Taka


Amount in Taka

Internal sources of cash
Share capital 60,000,000 60,000,000 60,000,000
Reserve or contingency account 31,285,771 18,966,190 9,754,426
Sub-total 91,285,771 78,966,190 69,754,426
External sources of cash
Premium deposit 4,969,544 8,448,202 7,181,916
Grand Total 96,255,315 87,414,392 76,936,342

c) Consider Last Five Year’s Financial Condition: Given to the below:

i) Additional disclosure on the account for the year 2003,2004,2005,2006 and 2007:

For five years:

Year Basic Earning No. of Share Rtio
2007 12,319,581.00 6,00,000 20.53
2006 9,211,764.00 6,00,000 15.35
2005 4,364,256.00 6,00,000 7.27
2004 11,437,466.00 6,00,000 19.06
2003 2,725,646.00 6,00,000 4.54

ii)Premium Deposit

Year wise break up of Deposit Premium is given below:

Particulars 2007 2006 2005 2004 2003
Opening Balance 8,448,202 7,181,916 47,565,558 59,252,377 47,107,994
Add: Premium Earned 100,760,675 127,527,426 74,217,814 89,445,035 95,051,878
Total: 109,208,877 134,709,332 121,783,372 148,697,412 142,159,872
Less: Premium Income 104,239,333 126,261,130 114,601,456 101,131,854 82,907,495
Closing Balance 4,969,544 8,448,202 7,181,916 47,565,558 59,252,377

iii) Disclosure on income

Break-up of operating income and non-operating income as under:

Particulars 2007 2006 2005 2004 2003
Amount % Amount % Amount % Amount % Amount %
Operating Income 2,09,40,489 63.3 1,67,06,519 61.5 1,20,09,223 58.9 2,02,98,797 75.2 53,63,635 39.2
Non-operating Income 1,21,59,326 36.7 1,04,69,611 38.5 83,68,835 41.1 67,00,255 24.8 83,24,640 60.8
Total Income 3,30,99,815 2,71,76,130 2,03,78,058 2,69,99,052 1,36,88,275


[1]. Annual Report of Sandhani Life Insurance Company Limited, 2006.

[2]. Annual Report of Northern General Insurance Company Limited, 2007.

[3]. Azizul Haq Chaudhuri, “Risk & Insurance”, 2nd Edition, Rainbow Book Mall, Dhaka.

[4]. Zinnatun Nesa, “Class Lectures on Principles of Insurance”, Summer Semester 2009, Daffodil International University.