Bangladesh Insurance Sector

Sector:Insurance
Sector PE: 18.12
%of Total Mkt. Cap: 5.74
Sector Beta: 0.90
CBL_Research &Investment
Untapped Opportunity Prevailing Bangladesh Insurance sector
BD Gen. Insurance Industry Net Profit Growth H/Y_2012
Particulars Fig. BDT mn Jan-Jun'11 Jan-Jun'12 Growth (%)
City General Insurance 21.18 60.90 187.54%
Pioneer Insurance 59.50 125.90 111.60%
Federal Insurance 13.21 26.10 97.58%
Standard Insurance 17.31 32.53 87.93%
Janata Insurance 10.31 17.64 71.10%
Northern Gen. Insurance 35.78 55.91 56.26%
Continental Insurance 24.21 37.77 56.01%
Republic Insurance 26.10 40.00 53.26%
Rupali Insurance 42.90 62.70 46.15%
Phoenix Insurance 66.20 95.20 43.81%
Sonar Bangla Insurance 17.28 22.80 31.94%
Takaful Insurance 25.51 31.41 23.13%
Asia Pacific Insurance 45.61 56.11 23.02%
Mercantile Insurance 35.10 42.90 22.22%
Reliance Insurance 90.24 109.60 21.45%
Provati Insurance 14.81 17.85 20.53%
Peoples Insurance 41.20 48.13 16.82%
Paramount Insurance 7.31 8.50 16.28%
BGIC 44.70 50.75 13.53%
Easland Insurance 86.90 98.29 13.11%
Eastern Insurance 43.42 49.11 13.10%
Agrani Insurance 12.22 13.11 7.28%
Pragati Insurance 76.45 80.31 5.05%
Prime Insurance 29.22 30.61 4.76%
United Insurance 36.70 37.70 2.72%
Cental Insurance 37.31 38.13 2.20%
Nitol Insurance 28.50 28.52 0.07%
Global Insurance 23.90 23.90 0.00%
Islami Insurance 11.91 11.59 -2.69%
Purabi Gen. Insurance 4.70 4.17 -11.28%
Karnaphuli Insurance 46.51 37.20 -20.02%
Asia Insurance 40.31 30.71 -23.82%
Dhaka Insurance 91.51 65.40 -28.53%
Green Delta Insurance 151.55 62.21 -58.95%
Source: DSE, Company Reports
September, 2012
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Industry Outlook:The Insurance Market of Bangladesh nowconsists of two state
owned corporations, forty three and seventeen private sector general & life
insurance companies respectively, a total of 62 insurance companies. Insurance
penetration is still below 1% in Bangladesh which is lowest in south asia. India
has 48 insurance companies of which, 19 companies are non-life and 29
companies are life. Pakistan has 36 insurance companies of which. 30 companies
are non-life and 6 companies are life. Sri Lanka has 17 insurance companies.
In year 2011, the insurance industry in Bangladesh observed a 10-15% growth
when compared with the period of 2008. During the last 10 years, the private
sector general insurance has experienced a growth of 197% in gross premium
income, underwriting profit increased by 175% and total asset grow by 163%.
Marine Hull & Cargo major contributed in the general insurance gross
premium.Industry experts expects that gross premiumgrowth in Bangladesh in
this ongoing year will be approximately 15-20%.
According to the Insurance Act 2010, life and non-life insurance companies
have to increase their paid-up capital to BDT 300 million and BDT 400 million
respectively. The increased paid up capital will increase the risk bearing capacity
of insurance companies. The newlaws have made provision for a fund to protect
the interest of customers, and allowed insurance companies to formsubsidiary
firms and run brokerage houses. Under the laws, insurance companies will have
fifteen directors of whomeight will come fromentrepreneurs, five fromthe public
and two as independent directors
Recent Developments: Earnings of listed insurance companies went up in the
first half this year as the insurers spent less on commission paid to their sales
agents. Earlier the companies used to pay 40 percent commission on average to
rope in clients, but the regulator set the highest ceiling at 15 percent in Marchand
ensured strict compliance.It is to be noted that the IDRA circular says that deposit
premiums first and agent commission will not be adjustable from premium
earnings. So it will assured more transparent in earnings of Insurance sector and
we hope it will be reflect more on forthcoming quarter earnings. Half-yearly profits
of 28 general life insurance companies, out of 34 listed, sawa rise by 38 percent
on average in comparison to the same period last year Prior to that, in a bid to
boost their client portfolio, the insurance companies would resort to offering
agency commission beyond the maximum ceiling of 17.5 percent. Insurance
Development and Regulatory Authority (IDRA) in a circular says that the countrys
43 non-life insurance companies will have to pay their commission through
account-payee cheques in favour of legalized agents.
Gross Premium Income in 2011 of Non-life Insurance Companies in
South Asian Countries (In Mn USD)
5203.91
517.23
412.5
244.49
20
1,020
2,020
3,020
4,020
5,020
6,020
India Pakistan Srilanka Bangladesh