Sbc Body DONE01

A report on financial analysis in

‘Sadharan Bima Corporation’

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1. Introduction:

The changing scenario presents us a new techniques and methods of business as well as their characteristics. The goal of business is to market the brand and product that will be attracted b the consumers and also the product will satisfy the consumers’ needs. The changing environment creates new issues that must be considered for doing a business. In this dynamic business world the scenario of business aspect changes so rapidly that one false decision could cause the firm to lose its very existence. We have chosen to conduct the study in Sadharan Bima Corporation.

1.1 Origin of the reportIn this report, we have studied about ‘Sadharan Bima Corporation’. Here we endow about details information about selling insurance, claim paying ability, service, performance, and a financial analysis.

1.2 Objectives of the study This report is prepared primarily to have a clear and real life idea about the position of

Sadharan Bima Corporation in insurance sector of Bangladesh. The overall current situation

of the insurance sector regarding the economic condition of Bangladesh and the industrial

analysis, which is within the preview of the ongoing course of Insurance and Risk

Management for preparing term paper. The secondary objective was to be expert in writing

term paper as well as representing financial situation of the company. In this term paper we

wanted to highlight the general insurance sector company which is Sadharan Bima

Corporation with in the shortest way possible.

1.3 Scope of the study / Study area:The scopes and objectives of this report are disclosed about the information of the Sadharan Bima Corporation. We have tried to find out several financial analysis and present various types of information about Sadharan Bima Corporation.

1.4 Methodology of the study / Methods and Material:In this report we have used secondary and primary data both. We got primary data by visiting the company and through questionnaire with an officer of Sadharan Bima Corporation.

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Different data and information are required to meet the goal of this term paper. Those data and information were collected from various sources such as primary and secondary which is showed below:

Primary data were collected from1. Face to face conversations with the employees at various fields of the organization.2. Personal interviewing and interaction customers at SBC.3. Observing various organizational procedures.

Secondary data were collected from1. Internet and annual report of Sadharan Bima Corporation.2. Progress report/ statement affairs and academic sheet of the firm.3. Several kinds of academic test book and training sheet.4. Different publications regarding insurance sector of Bangladesh and its operations.

1.5 Limitations of the study When we were preparing this we were facing some problems, such as some rules and regulations of the Sadharan Bima Corporation.

1. Due to some legal obligation and business secrecy firms are reluctant to provide data. For this reason, the study limits only on the available published data and certain degree of formal and informal interview.

2. The employees are very busy with their jobs, which lead a little time to consult with them.

3. As for being government organization the situation and financial patterns are not like the usual company we followed.

4. As it is a statutory company we have to face a very lengthy communication process.

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2. An overview of Sadharan Bima Corporation

2.1 Company profile and historical background

Sadharan Bima Corporation is only state-owned General Insurance Corporation operating under the direct control and supervision of the Ministry of Commerce, Government of the People’s Republic of Bangladesh. It emerged on 14th May, 1973 under the Insurance Corporation Act (Act No. VI) Of 1973 to deal with all classes of general insurance & re-insurance business emanating in Bangladesh.

Thereafter, Sadharan Bima Corporation was acting as the sole insurer of general Insurance till 1984. In the year 1984 Bangladesh Government allowed insurance Companies in the private sector and to that effect promulgated the insurance Corporations (Amendment) Ordinance 1984.

Sadharan Bima Corporation has a very strong financial base. It has a market share of over 20% of the total premium income of the insurance market of Bangladesh. SBC, the largest insurance enterprise in the country, has a net worth of Tk.6050 million an authorized capital of Tk.200 million, paid up capital of Tk. 100 million and the anticipated revenue during the current financial year is approximately Tk. 4170 million.

Following characteristics of Sadharan Bima Corporation proves its financial soundness: - Government owned enterprise - Financial Soundness due to huge assets owned by Sadharan Bima Corporation - Only re-insurer in Bangladesh - Wide net-work of offices - Public trust - Huge trained & skilled manpower - Large investable fund - Huge Real Estate Assets in Dhaka, Chittagong, Khulna, Rajshahi, Bogra & Sylhet. SBC TOWER – the only multistoried car parking building in the heart of the capital city of Bangladesh

SBC is the sponsor shareholder of Investment Corporation of Bangladesh, Industrial Development and Leasing Company, National Tea Company Limited, National Housing Finance and Investment Ltd, Aramit Ltd, Central Depository BD Ltd.etc.

SBC has met all prudential norms in further its financial strength. Not only that, Sadharan Bima Corporation has emerged as one of the country’s few largest taxpayers in the corporate sector.

SBC is entitled to 50% of public sector business in Bangladesh. Insurance Corporation (Amendment) Act 1990 provides that fifty percent of all insurance business relating to any public property or to any risk or liability appertaining to any public property shall be placed with the SBC and the remaining fifty percent of such business may be placed with this Corporation or with any other insurers in Bangladesh. But for practical reason and in

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agreement with the Insurance Association of Bangladesh SBC underwrites all the public sector business and 50% of that business is distributed among the existing 43 private general insurance companies equally under National Co-insurance Scheme.

In respect of reinsurance, the same act provides that fifty percent of a company’s reinsurance business must be placed with the SBC and remaining fifty percent may be reinsured either with this Corporation or with any insurer in Bangladesh or abroad.

The main pillar of the SBC is insurance as well as reinsurance business. SBC is the largest non-life insurance underwriter in Bangladesh in terms of gross premium, network of offices & trained manpower. On the other hand, SBC reinsures the risks of private insurance companies operating in Bangladesh.

2.2 Mission vision, goal and objectiveVision of the company

To be a world class insurance & reinsurance organization.

Mission of the company To be the premier organization in Bangladesh for all insurance and reinsurance

business and to provide quality at affordable cost. To be the insurer of the first choice in Bangladesh by offering top class security,

comprehensive, efficient services and professional conduct of business. Maintain SBC’s leading position in the insurance market of Bangladesh. To become an insurance organization of international standard by attaining the

highest confidence and trust of all concern form home and abroad through improve services, dedication customer care and efficiency.

To place innovation, technology and knowledge at the heart of the organization’s growth.

Goals of the company Venture into other areas in Bangladesh and abroad on the strength of SBC’s core

competency. Enter into and expand new insurance product and services to meet the changing needs

of clients. Fulfillment of SBC’s social commitments towards the public as a state owned

enterprise.Objectives of the company To achieve business targets. To increase share of private sector business through marketing efforts. To build, maintain and improve the commercial image of the organization and gain

recognition as a competent and professional insurer as well as re-insurer. To overhaul and simplify administrative system & procedure. To attain full computerization and to utilize IT to its full potential.

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To reduce operating cost. To enhance the skills and flexibility of the employees through continuous training. To ensure better return from SBC’s investment. To improve maintenance of existing real estate and expansion of it.

2.3 Organization Structure:

Under the statute, Sadharan Bima Corporation is run by a Board of Directors consisting of 7 members. The chairman and the directors of the Board including the Managing Directors are appointed by the Government. The Managing Director, being the chief executive, conducts and manages the affairs and business of the corporation in accordance with the provisions of the Act, regulations, Government instructions and the resolutions of the Board. He is also guided by the sound commercial principles and business practices.

The present organization structure of Sadharan Bima Corporation is given below:

1. Managing Director - Chief Executive2. General Manger 3. Deputy General Manager 4. Assistant. General Manager 5. Manager 6. Deputy Manager 7. Assistant. Manager 8. Junior Officer 9. Office Staff 10. Total strength

2.4 Brunches and offices

The Head Office of Sadharan Bima Corporation is located at 33, Dilkusha Commercial Area, Dhaka. In order to give efficient service to the insuring community, the management setup 6 Zonal offices at Dhaka, Chittagong, Rajshahi, Khulna, Narayangonj, and Comilla, and 2 Regional offices at Sylhet and Mymensingh. Corporation also set-up offices in various places, specially in the Muffassol Area. Sadharan Bima Corporation has now 110 offices all over the country. These offices are smoothly running with near about 1500 Officers and Employees.

The addresses of the offices of SBC throughout the country are given below:Dhaka Zonal OfficeChittagong Zonal OfficeRajshahi Zonal Office6

Khulna Zonal OfficeNarayangong Zonal OfficeComilla Zonal OfficeSylhet Regional OfficeMymensingh Regional Office

2.5 Company performance and growth

The underwriting profit stood at tk 17.18 crore in 2006 as against tk 13.51 crore in 2005 this shows an increase of 27.17% from previous year.

2.6 Capital and expenditure

Authorized capital of Sadharan Bima Corporation is tk 20.00 crore and the expenditure was48547667.

2.7 Future Plans

Sadharan Bima Corporation wants to be the premier organization in Bangladesh for all insurance and reinsurance business and to provide quality services at affordable cost. Sadharan Bima Corporation also wants to be the insurer of the first choice in Bangladesh by offering top class security comprehensive, efficient services and professional conduct of business. Sadharan Bima Corporation wants to use every possible system and technology and knowledge to perform as an international standard corporation while being number one organization in insurance sector of home and abroad.

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3. Insurance policies and conditions:

As for being a General Insurance Company Sadharan Bima Corporation has to and has been offering a vest number of insurance policies. There are around 24 polices covering different sectors of buseness and personal assets and interest to meet the demand of regular business and personal life. Such products are:

01 FIRE INSURANCE POLICY

02 MARINE HULL INSURANCE POLICY

03 MARINE CARGO INSURANCE POLICY

04 MOTOR INSURANCE POLICY

05 HOUSE HOLDER’S COMPREHENSIVE INSURANCE POLICY

06 PRODUCT LIABILITY INSURANCE POLICY

07 BURGLARY INSURANCE POLICY

08 CONTRACTOR’S ALL RISK POLICY

09 ENGINEERING INSURANCE POLICY

10 PUBLIC LIABILITY INSURANCE POLICY

11 AVIATION INSURANCE POLICY

12 WORKMEN’S COMPENSATION POLICY

13 CASH IN SAFE INSURANCE POLICY

14 CASH IN TRANSIT INSURANCE POLICY

15 CASH ON COUNTER INSURANCE POLICY

16 PERSONAL ACCIDENT INSURANCE POLICY

17 PEOPLES PERSONAL ACCIDENT INSURANCE POLICY

18 DREAD DISEASE INSURANCE POLICY

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19 OVERSEAS MEDI-CLAIM (BUSINESS & HOLIDAY) INSURANCE

20 OVERSEAS MEDI-CLAIM (EMPLOYMENT & STUDY) INSURANCE

21 EXPORT CREDIT GUARANTEE INSURANCE

22 LIVESTOCK INSURANCE POLICY

23 ALL RISKS INSURANCE POLICY

24 FIDELITY GUARANTEE POLICY

Not only had the products put a boundary in the way of Sadharan Bima Corporation. Various services are also included to SBC and they are very promissory too in that sector. Services such as:

01 Re- insurance Service02 Risk Improvement Services03 Industrial Development through Equity participation04 Human Resources Development for Insurance Industry

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1. FIRE INSURANCE POLICY

Standard Fire Insurance Policy

Description of Fire Insurance Business :

Fire Insurance: It primarily aims at providing protection against financial losses arising out of the operation of fire or certain other specified perils. The subject matter of insurance is usually: (a) Building (b) Plant & Machinery (C) Furniture, Fixture and fittings (d) Goods and Merchandise. (e) Stocks of all kinds

Direct risks covered under standard fire insurance policy:Accidental fire, lightning & Explosion (Boilers or gas used for domestic purposes only). The perils covered by the policy in its normal terms are:-

a) Fire: Whether resulting from explosion or otherwise. b) Lightning: Whether fire results or not. c) Explosion: Boiler used or gas used for domestic purpose only.

In addition to the above, this Policy also generally covers the following forms of damage :-

1. Damage during or immediately following a fire caused bya) Smokeb) Scorching c) Falling walls and the like-

2. Damage caused by a fire brigade or other competent authority in discharge of their duty including :- a) Damage caused by water or other extinguishing agents employed. b) Damage caused by the blowing up of buildings to prevent the spread of a configuration.

3. Damage to property while being removed from a building or immediately after its removal from burning building caused by exposure to weather, provided the removal was justified.

Additional risks covered on payment of additional premium:a) Riot and strike damage (RSD) b) Explosion damage (including commercial purpose) c) Malicious damage. d) Earthquake e) Spontaneous combustion. f) Cyclone g) Flood. h) Busting or overflowing of tanks, pipes etc. i) Subsidence j) Land slide, k) Articles dropping from aircraft l) Subterranean fire m) Sprinkler leakage

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Consequential loss also an additional risk which is covered by paying additional premium.

Remarks

The policy does not cover: - War, Undergoing any process or heating, Spontaneous fermentation, Sentiment Value, Radio Active Contamination or Ionizing radiation .

2. MARINE INSURANCE POLICY

Marine Hull Insurance:

Hull means the insurance of ship. The ship is always at the risk of the perils of the seas and therefore, the ship-owner can insure it against probable losses as such. The subject matter of hull insurance are usually:- a. Hull b. Plant & Machinery c. Refrigeration Machinery etc. d. Freight (if the freight is after paid when at the risk of the ship owner)Direct risk covered under Marine Hull Insurance:Fire, theft, jettison, collision, contact, heavy weather, Stranding/ foundering, sinking, General average, Sue & labour charges. The Marine Hull policy may include liability hazards such as collision or running down.

Additional Risk Covered on payment of additional premiumWar Strike Riot Civil Commotion (SRCC)

Remarks:

Premium being determined on a rating subject to age and class of construction of Hull.Risks covered under following categories :-a) ITC (All risk Policy)b) TLO (Total Loss only)

According to the law the insured is required to pay the Stamp duty of this policy.

3. MARINE CARGO INSURANCE

Marine Cargo Insurance: Cargo meaning the insurance or goods being conveyed. This refers to goods or merchandise that one being carried from one place to another or ore being

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imported or exported. Such goods or merchandise may be lost damaged or destroyed by perils of the seas whilst in course of transit and therefore, the owner of such goods can always insure against the possible losses.For the purpose of Marine Insurance goods/cargo carried by the following three ways:(a) By ship or steamer or powered vessel(b) By land conveyance (Truck/ Lorry / Rail) (c) By Air.

GOODS CARRIED BY SHIP ONLY

Risk covered by ship or steamer or powered vessel against following three categories :-

Institute Cargo Clause ‘A’ ( ICC ‘A’)The insurance covered all risks of loss of on damaged to the subject matter insured except as willful misconduct, ordinary leakage, ordinary loss in weight wear and tear, loss or damage caused by unsuitability of packing, inherent vice, delay, arising from insolvency or financial default of the owners of the vessel.

Institute Cargo Clause ‘B’ ( ICC ‘B’)This insurance covered loss or damage caused by fire or explosion, stranded, grounded, sunk or capsized, overturning or derailment of land conveyance, collision or contact of vessel craft, discharge of cargo at a post of distress, earthquake, volcanic iruption of lightning. This policy also covered general average sacrifice, jettison or washing overbroad, entry of sealake or river water, total loss of any package lost overbroad or dropped whilst loading on to or unloading from vessel.

This policy does not cover willful misconduct ordinary leakage ordinary loss is weight wears and tear loss damage or expense caused arising from insolvency of the owner of the vessel or unsuitability of packing, inherent vice, delay, un seaworthiness and un fitness.

Additional risks covered on payment of additional premium TP, ND, Hooks, Holing, bursting, Tearing, leakage loss, RFWD, Extraneous, Substance, Heating, Breakage and Scratching, Splitting.

Institute Cargo Clause ‘C’( ICC ‘C’)This insurance covered loss or damage caused by fire or explosion, stranded, grounded, sunk or capsized, overturning or derailment of land conveyance, collision or contact or vessel craft, discharge of cargo at a post of distress, earthquake, volcanic irruption on lighting. This policy also covered general average sacrifice, jettison.

This policy does not cover willful misconduct ordinary leakage ordinary loss is weight wears and tear loss damage or expense caused by in sufficiency or unsuitability of packing, inherent vice, delay, arising from insolvency or financial default or the owners of the vessel.

Additional risks covered on payment of additional premium: Theft and Pilferage (TP) Non-Delivery (ND).

GOODS CARRIED BY RAIL/LORRY/TRUCK

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Goods or cargo covered by above transports may be covered as under1. By Rail/Lorry/Truck Risk only 2. By Rail/Lorry/Truck All Risks.GOODS CARRIED BY AIR

Goods or cargoes conveyed by above transport may be covered as under :1. Air Risk Only2. Air All Risks

Remarks:

Premium being determined on a rating subject to age and class of construction of Hull.Risks covered under following categories :-c) ITC (All risk Policy)d) TLO (Total Loss only)

According to the law the insured is required to pay the Stamp duty of this policy.

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4. MOTOR INSURANCE POLICY

Description of Motor Insurance Business:

Motor Insurance: Different types or policies may be issued for different types of motor vehicles, Motor vehicles are usually classified in the following manner:- Private Cars, Commercial vehicles, Motor Cycles, Agricultural vehicles, Motor Trade vehicles.

Motor policies issued are usually of the following types irrespective of the class of vehicles:a) Comprehensive policy b) Act liability only policy.

Definition of private vehicle : The Vehicles under private registration & used for private purposes only.

Direct risks covered under private motor comprehensive insurance policyFire, explosion, burglary and theft, riot & civil commotion, earthquake, flood & cyclone, storm, any type of accidental loss and Act liability (Life & property)

Extra benefits which may be included on payment of additional premium1. Loss of Rugs, Coats and Luggage against fire and theft within a limit of Tk. 1,500 for any one loss2. Accident to insured and any named passenger between 16-65 years of age (other than the insured and the paid driver)3. Accident to unnamed passenger between 16-65 years of age (other than the insured and the paid driver)4. Accident to insured and his/her/wife/husband5. Legal liability under workmen’s compensation Act. 1923, Fatal Accident Act. 1855 and at common law to person’s employed in connection with the operation or maintenance of the vehicle6. Legal liability of passengers for act of negligence7. Electrical or electronic fitting fitted to the vehicle

Definition of commercial vehicle:The vehicle used for hire or reward and which are not provided for under the scope of private vehicle or motor cycle and registered as commercial vehicle.

Direct risks covered under commercial motor comprehensive insurance policy Fire, explosion, burglary and theft, riot & civil commotion, earthquake, flood & cyclone, storm, any type of accidental loss and Act liability (Life & property)

Extra benefits which may be included on payment of additional premium1. Electrical & Electronics appliances.2. Approved Tachometer

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3. Legal liability to non-fare paying passengers who are employees of the insured but not workman as per workmen’s compensation Act.4. Legal liability to non-fare paying passenger who are not employees of the insured.5. Legal liability to person employed in connection with the operation and maintenance and/or for loading and unloading of the goods carrying vehicle excluding drivers.6. Legal liability to paid driver and /or conductor in connection with the operation of Buses only.7. Legal liability under workmen’s compensation Act. in respect of carrying of more than 7 (Seven) persons of such employees including driver in a goods carrying vehicle.8. Indemnity to Hirers.

In addition in respect of a commercial vehicle which is used for carriage of passenger for hire or reward and in respect of which legal liability to passenger is required to be covered in terms of the motor vehicles Act 1991 is subject to additional premium (Passenger risk coverage is compulsory) of liability to passenger in accordance with the premium of the motor tariff.

5. HOUSE HOLDER’S COMPREHENSIVE INSURANCE POLICY

This policy consists of 11 sections:

Section -IA – BuildingB - Contents (Excluding Jewellery & Valuables)

Section -IIBurglary and Housebreaking Including larceny or theft ((Excluding Money & Valuables)

Section -IIIAll risks (Jewellery & valuables)

Section –IVPlate Glass

Section –VBreakdown of domestic appliances

Section -VITelevision set

Section –VIIPedal Cycle

Section –VIIIBaggage

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Section -IX

Personal Accident

Section -XPublic Liability

Section -XIWorkmen’s Compensation

Note : List of items under each section is shown separately.

This policy covered the following Risks

The Corporation will indemnify the insured in respect of loss of or damage to the contents/building whilst contained in the insured premises by:a) Fire, Lighting, Explosion of gas in domestic applianceb) Bursting and overflowing of water tanks, apparatus or pipes.c) Aircraft or articles dropped therefore.d) Riot, Strike or Malicious Act.e) Earthquake Fire and/or Shock, Subsidence and Landslide (including Rockslide) damage.f) Flood, Inundation, Storm, Tempest, Typhoon, Hurricane, Tornado or Cyclone.g) Impact damage.

This Policy shall not cover :

SPECIAL EXCEPTIONS:- The Corporation shall not be liable in respect of:a) loss of or damage to articles of consumable nature.b) loss of or damage to money, securities, stamps, stamp collection, bullion, livestock, motor vehicles and pedal cycles.c) loss of or damage to deeds, bonds, bills of exchange, promissory notes, shares and stock certificates, business books, manuscripts, documents of any kind, unset precious stones and jewellery and valuables unless specifically declared.

No one article other furniture is deemed to be more than 5% of the sum insured under this section unless separately specified and value stated.

6. PRODUCT LIABILITY INSURANCE POLICY

Product liability means liability arising out of the handling or use of the existence of any condition in or warranty of goods or products manufactured, sold, handled or distributed by the named insured, other than equipment, rented to or located for use of others but not sold after the insured has relinquished possession thereof to others and away from premises owned, rented or controlled by the insured

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Liability arising from operations, if the occurrence occurs after such operations have been completed or abandoned at the place of occurrence thereof and away from premises owned, rented or controlled by the Insured, except (a) pick-up and delivery, (b) the existence of tools: uninstalled equipment and abandoned or unused materials; performed or because further operations may be required pursuant to a service or maintenance agreement.

Direct risk covered under product liability insurance

This types of policies provide cover in respect of the legal liabilities of the manufacturers, suppliers etc. And losses arising out of any defect in the product, manufactured, sold or supplied.

Remarks.

For details, please contact any of our nearest branch office

7. BURGLARY INSURANCE POLICY

Description of Burglary Insurance Business:

Burglary Insurance: This policy aims at providing cover in respect of the property of business premises of private dwelling and / or commercial premises.

Direct Risk Covered under Burglary Insurance Policy:

Arising out of theft committed therein by actual forcible entry.

Additional risks covered on payment of additional premium:

Larceny

Remarks:

The premium rate of this policy varies with the type of business, the location and the type of construction.

Contractor’s All Risk Insurance policy

Normally the contract in between the principal and the contractor may require the contractor to take out a policy of insurance to protect the contract work from unforeseen contingencies.

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The policy aims at covering the entire contract work including construction, materials. plants, equipment’s, machinery’s etc. at site during the contract period and maintenance period.

Direct risk covered under Contractor’s All Risk Insurance:

Fire, Burglary & Theft, Storm, Flood, Cyclone, Earthquake, subsidence collapse Accidental damage.


8. ENGINEERING INSURANCE POLICY

Description of engineering insurance business

Engineering Insurance: This insurance is to protect the Engineering Machine from unforeseen contingencies. This type of insurance embraces, steam, boilers, lifts, hoists, cranes, electrical plants, engines, refrigeration plants etc. Various types of policies are issued in Engineering Insurance:- a) Erection all risks policy b) Machinery break down policy c) Deterioration of stock (DOS) policyd) Boiler and pressure vessel (BPV) policy.Direct risk covered under engineering insurance:

Fire, accidental damage, collapse, electrical and mechanical breakdown, burglary, theft and malicious damage.


Act of God (Earthquake, flood, Cyclone), liability of third party (death or bodily injury and third party property).

Remarks.

For details, please contact any of our nearest branch office :

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9. PUBLIC LIABILITY POLICY

Description of Public Liability Insurance Business:

Public liability Insurance: Public liability insurance is designed to afford an indemnity to the insured in respect of his legal liability to the public for accidental bodily injury or property damage happening out of certain events. Like other classes of general insurance business, public liability policy embraces the principles of utmost good faith, insurable interest, subrogation & contribution. In order to grant public liability insurance a duly completed proposal form needs to obtain from the proposer. The following features should be considered in charging the premium:

(a) The amount of indemnity(b) Whether any extension of the usual cover is required(c) The business(d) The general nature of risk

The limit per incident & total number of incident in a year must be fixed. The premium is calculated on the basis of annual turnover.

Direct risk covered under public liability insurance:a. Accidental death or bodily injury to third party (Including illness or disease) not being persons in his employment’s due to the negligent act of the insured or for which he is responsible.

b. Accidental damage caused to the property of third party due to the negligent act of the insured or for which he is responsible.

Remarks:


10. AVIATION INSURANCE POLICY

Description of aviation insurance business

The Aviation Insurance referred to the universally recognized insurance for aircraft with standard conditions accepted by the underwriters. An airline operator purchases these insurance policies. In general aviation refers to the aircraft, that is to say, hull and machinery of the aircraft. The following types of covers are given:- (a) Insurance of the aircraft itself against loss or damage. (b) Insurance of legal liability to third parties and passengers. (c)

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Insurance of pilots, crews and ground staff for personal accident. (d) Insurance of pilots against loss of professional license, (e) loss or damage to cargo carried.

Sadharan Bima Corporation solely underwrites all types of Aviation Risks of Bangladesh Biman Corporation(the National Flag Carrier). And also underwrites other Aircraft risks of local private aircraft operators. SBC also covers insurance of pilots, crews and ground staffs for Personal Accident and insurance of pilots against Loss of Professional License(LOL).

Aviation Insurance Policy : The following major policies are available to cover the Aviation Risk in Sadharan Bima Corporation :1) Aviation hull all risks insurance : It covers ‘All Risks’ of physical loss or damage to an aircraft (except exclusions provided in the policy). Covers also include pilot error, theft, all natural causes, damage during maintenance, ground fires/ taxiing accidents etc. Coverage does not include groundings due to FAA or manufacturer defectives or consequential loss of revenues, radioactive contamination / nuclear war and allied perils and mechanical breakdown.2) Aviation hull war and allied perils insurance : This policy covers loss of or damage to an aircraft resulting from war and associated perils including confiscation, terrorist acts, strikes, riots, sabotage and hijacking. Exclusions are : losses arising from nuclear war, War between the five major powers and UN geographical exclusions are some time imposed.

3) Spares all risk insurance : : It covers ‘All Risks’ of physical loss or damage to spares including spares engines when not fitted to an aircraft.4) Aviation legal liability insurance : This insurance covers operators liabilities to passenger, passenger’s baggage, cargo and mail and legal liabilities to the third parties. Deductibles are normally applied only in respect of baggage claim.

5) Deductible insurance : This insurance designed to reduce the standard level of deductible imposed under the main Hull All Risk Insurance. It is normally a separate policy and subject to aggregate limit for all claims.6) Aviation war, hijacking and other perils excess liability insurance : This insurance policy covers damages for bodily injury or property damage, caused by an occurrence in excess of the limitation of liability contained. This policy attached in the Aviation policies after the terrorism activities of 09.11.2001 World Trade Centre(USA).

7) Total loss only insurance (TLO) : This insurance provides the protection of an additional insured amount payable in the event of total loss of the aircraft.

11. WORKMEN’S COMPENSATION INSURANCE POLICY

Workmen’s compensation Insurance: This type of policy are designed to provide protection to the employer (Insured) in respect of the legal liabilities that might devolve on him arising out of accidental death or bodily injury to his employees in course of work. All such financial liabilities are covered by this policy. This type of insurance provides covers death & or personal injury by accident or disease arising out of & in the course of his employment by the insured in the business & if the insured shall be liable to pay compensation for such injury either under the Law (s) set out in the schedule or at common law.

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Direct Risk Covered under Workmen’s Compensation Insurance:

Accidental death or bodily injury, Occupational diseases

Remarks:

Maximum limit of liability: for death Tk.21,000/= Permanent disablement Tk.30,000/= per person.

12. CASH IN TRANSIT INSURANCE POLICY

It is essential that all case a fully completed proposal form to be obtained from the proposer. The policy schedule must also be fully completed so that no discrepancy exists and the cover provided is specifically and exactly. The premium for this type of insurance is to be calculated using the insured’s estimate of the amount of cash in transit (turn-over) annually. The turn-over is to be ascertained by multiplying approximately the numbers of carriages which the insured expects to make in the year with the agreed single carry which shall be maximum liability of the insurer in the event of any one loss at one time. It is, however, mentioned here that this types of policies should not be issued on declaration basis. Care should be taken that limit per single carry is not unduly excessive. As per practice the cover should be granted in respect of areas which are prove by the inasured.

Cash and currency notes whilst in transit in between the Branches, Sub-Branches, Booths, collection and or/payment and/ or Purchasing centers should be in the custody of minimum one responsible officer and / or Cashier of the bank and escorted by minimum one Guard with Fire-arms, whilst carried by conventional mode of transport such as Car/Jeep/Pick-up/Auto Rickshaw/Micro-bus/Mini-bus/Staff-bus/Passenger-bus/Private-bus/Commercial Truck/Private Truck/Van (All sorts)/ Rail (Passenger)/Helicopter/Steamer/Speed Boat/Sea Truck and Launch (Other than passenger).

All other modes of transport are to be treated as non-conventional. In case of multiple modes of transport, the mode of transport which consumed the major part shall have to be considered for the concerned transit.

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Cash on counter & cash in safe :

To grant this type of cover the following information must be obtained through proposal form :(a) Nature of business transacted in the premises.(b) Amount of cash required for insurance(c) By whom the key are held & number of keys used to open the safe(d) What precautionary measures have been taken to check & prevent any kind of burglary, theft & hold up.(e) Full description of the safe.

Description of Cash in Safe and Cash on Counter Insurance Business:

Cash in safe and Cash on counter money or cash is always at the risk of robbery or theft. The policy aims at providing protection when the money is subjected to theft or robbery. These policies are very much helpful in such undesirable situations.


In addition to money, cover may also be provided for stamps securities money orders, postal orders etc.

13. PERSONAL ACCIDENT INSURANCE

Description of Personal Accident Insurance Business:

Personal Accident Insurance: This is the basic type of policy providing cover in respect of accidental death or bodily injury to the insured and also providing benefit in respect of temporary total or temporary partial or permanent total or partial disablement of the insured arising out of accident.

Direct risk covered under personal accident insurance:

a) Death, permanent, total, partial & temporary disablementb) Death, permanent, total & partial disablement c) Death only.


Medical expenses can be included under (a) .

Remarks:• Insured is required to pay the stamp duty. • The age limit of personal accident insurance is 16-70 years.

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• Incase of garments worker the age limit is 14-70 years.

People’s Personal Accident Policy

People’s Personal Accident Policy provides benefit for the death and disablement arising out of accidental bodily injury. If the shall sustain any bodily injury resulting solely and directly from accident caused by outward, violent and visible means, then the Corporation shall pay to the insured the sum setforth in the following schedule of compensation.

Schedule of compensation :a) Death (within 6 calendar months of injury) Capital sum insured

b) Total permanent loss of sight of both eyes/ total permanent loss of both hands/both feet/ one eye and one limb/ one hand Capital sum insuredand one foot. (Within 6 calendar months of injury)

c) Total permanent loss of sight of one eye/ total permanent loss 50% of capital sum insuredof one hand/ one foot. (within 6 calendar months of injury)

d) Permanent total and absolute disablement caused by injury. Capital sum insuredwithin 12 calendar months of injury)

The Capital sum insured of this policy is Tk. 40,000/-

Premium is only Tk. 28.75 (including VAT)

14. DREAD DISEASE INSURANCE POLICY

Dread Disease Insurance policy aims to cover medical expenses of the insured if the insured suffers from any of the dread diseases after issuance of the policy. Dread disease means any of the following which is directly covered under Dread disease insurance policy.1) Coronary Heart Disease 2) Stroke3) Cancer4) Kidney failure5) Organ Transport6) Multiple Sclerosis

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Sum Insured : The insured selects a sum (ranging from a minimum sum Insured of Tk. 5,00,000.00 to Tk.25,00,000.00 per insured) that he feels comfortable with, both in terms of its premium cost and the cover offered.

Condition : Insured person should be diagnosed during the period of Insurance as suffering from a Dread Disease, symptoms (and / or the treatment) of which were not present in such Insured person at any time prior to inception of the policy or the date on which cover was granted to such Insured person and if the Insured person survive the Diagnosis for a period of 30 (thirty) successive days there after SADHARAN BIMA CORPORATION shall pay the Insured as compensation “the Sum insured” set against such Insured person’s name in the schedule.

Diagonsis means, Diagonsis by a registered medical practitioner, supported by clinical radiological, histological and laboratory evidence, acceptable to SADHARAN BIMA CORPORATION.

Remarks.

Coverage is on an annual basis, with the premium being calculated on a rating subject only to age.

15. OVERSEAS MEDI-CLAIM (BUSINESS & HOLIDAY) INSURANCE POLICY

Overseas Medi-claim Insurance for (Business & Holiday): Overseas Mediclaim Insurance for Business and Holiday is available for Bangladesh nationals visiting abroad for the purpose of business and holiday tour.

Direct risk covered under overseas medi-claim(Business & Holiday) Insurance:

Intended only for use of insured person in the event of a sudden and unexpected sickness or accident arising when the insured is staying out side Bangladesh.

Remarks:

For the purpose of premium rates and benefits available overseas Medi-claim Insurance for business and holiday is divided into two plans: Plan-A: For Bangladeshi visiting countries other than USA and Canada. Limit of maximum liability is US$ 50,000 Plan-B: For Bangladeshi’s visiting USA and Canada. Limit of maximum liability is US $ 1,00,000. Coverage is on a period basis, with the premium being calculated on a rating subject to age and plan.

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16. OVERSEAS MEDI-CLAIM (EMPLOYMENT & STUDIES) INSURANCE POLICY

Description of Overseas Medi-claim (Employment & Studies) Insurance Business:

Overseas Mediclaim Insurance for (Employment & Studies): Overseas Mediclaim Insurance for Employment and studies is available for Bangladeshi Nationals temporarily residing outside Bangladesh having been posted by their Bangladesh Employer to work in that country or for the purpose of furthering their education or solely engage on research projects.

Direct risk covered under medi-claim (Employment & Studies) Insurance:Intended only for use of insured person in the event of a sudden and unexpected sickness or accident arising when the insured is staying out side Bangladesh.

Remarks:

The policy is divided into two plans:

Plan-C: For Bangladeshi’s staying in countries other than USA and Canada limit of maximum liability is US$ 75,000.

Plan-D: For Bangladeshi’s staying in USA and Canada limit of maximum liability is US $ 75,000. Coverage is on monthly basis, with the subject to age and plan.

Export Credit Guarantee Scheme

Sadharan Bima Corporation introduced. Export credit guarantee scheme with effect from 01.01.78 through its Export Credit Guarantee Wing as per order of the Government of the People’s Republic of Bangladesh in order to promote national exports. The primary objective of Export credit department is to boost up and strengthen the export promotion drive in Bangladesh by offering guarantees to banks and financial institutions to enable exporters to obtain easily better loan facilities from them both at the pre-shipment & post-shipment stage.

Direct risk covered under Export Credit Guarantee Scheme:

By providing a credit risk insurance covers to exporters against losses resulting from both commercial and non-commercial (political) risks in respect of goods sold to foreign buyers on credit. Broadly speaking, the objective of Export credit guarantee is to encourage

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exporters to export more, attract newcomers to export business, promote new export products, to open up new market.

At present the following finance guarantee and policy are issued by ECGW :-a. Export finance (Pre-shipment) Guaranteeb. Export finance (Post-shipment) Guaranteec. Whole turnover Export finance (Pre-shipment) Guaranteed. Export Payment Risks Policy.

Live Stock Insurance / Cattle Insurance

This insurance basically relates to cattle and horses and provides protection against loss, of animals.

Direct risk covered under Live Stock Insurance

Under this policy the corporation will indemnify the policyholder(insured) against loss sustained as a result of the death occurring during the period of insurance of any animal described in the schedule attached to the policy from accident or disease, sustained or contractor during the period of insurance, subject to the terms, exceptions and conditions incorporated on the policy.

17. ALL RISKS INSURANCE POLICY

All risk policy: This type of policy affords a very wide protection with regard to all contents including valuable properties in private dwelling house and the building itself.

There are two types of policy i.e. a. All risk policy on contents b. All risk policy on Building.

Direct Risk Covered under All Risk Insurance:

Fire, accidental losses or damages arising out of theft committed therein by actual forcible entry.

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Servants goods, loss of rent, Tenants liability, accidents to servants.

Remarks:


18. FIDELITY GUARANTEE POLICY

Fidelity Guarantee Insurance: This type of policy covers the insured in respect of the loss sustained by him arising out of fraud, defalcation or dishonesty caused by the employee of the insured. Usually those employees are covered by this type of insurance who either handle cash or hold positions of trust.

There are following types of policies:-1) Individual policy2) Collective policy3) Floating policy4) Excess Floating policy5) Position policy6) Blanket policy.Direct Risk Covered under Fidelity Insurance :

Fraud, defalcation, dishonesty


Remarks:


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SERVICES PROVIDED

Reinsurance serviceSadharan Bima Corporation in its role as a re-insurer has lent support to the private insurance companies in Bangladesh in a big way. In view of the huge networth and retention capacity, SBC has accepted both treaty and facultative businesses from the private insurance companies.SBC also accepts reinsurance business from overseas market through its intermediaries and as well as directly.

Industrial development through equity participationSBC plays a vital role in the industrial development of Bangladesh. SBC is the sponsor shareholder of Investment Corporation of Bangladesh, Industrial Development and Leasing Company, National Tea Company Limited, National Housing Finance and Investment Ltd, Aramit Ltd, Central Depository BD Ltd.etc. SBC has huge amount of fixed deposit reserve with various commercial banks in Bangladesh.

Risk improvement servicesSBC would always endeavor to deliver the best customer services for the fulfillment of insurance, reinsurance and risk management needs and problems to the insurance market in Bangladesh. On the other hand, SBC provides risk improvement services to its valued clients through Pre-underwriting inspection services. SBC has the opportunity to take the necessary help and advice from the foreign reinsurer regarding risk improvement techniques.

Human resources development for insurance industryTo develop the human resource for the insurance industry in Bangladesh. SBC has arranged professional training for its officers & staffs both within the country and abroad. SBC also arranged professional training for the officers of the private insurance companies operating in Banglades

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REINSURENCE SERVICES

After establishment of private Insurance Companies in the year 1985 in Bangladesh, Government authorized SBC to accept 100% reinsurance of private insurance company’s. SBC in its role as a re-insurer has lent support to the private insurance companies in Bangladesh in a big way. In view of the huge net-worth and retention capacity, SBC has accepted both treaty and facultative businesses from the private insurance companies.

In respect of reinsurance, the Insurance Corporation (Amendment) Act 1990 provides that fifty percent of a company’s reinsurance business must be placed with the SBC and remaining fifty percent may be reinsured either with SBC or with any other insurer in Bangladesh or abroad. SBC is doing direct insurance as well as private insurance company’s reinsurance.

SBC is the largest General Insurance Corporation in Bangladesh doing direct Business to the tune of BDT 886 million in the year 2005. During the same period its reinsurance premium income was BDT 2627 million.

SBC is a shareholder of Asian Reinsurance Corporation. SBC’s major portfolio comprises of fire, marine cargo, aviation and engineering business.

SBC also accepts reinsurance business from overseas market through its intermediaries and as well as directly.

The sound financial backing and rich experience earned over the years in the field of insurance, reinsurance and financial services (which includes investment, risk improvement services etc), brings SBC in an ideal position of a professional reinsurer in Bangladesh.

At the present growing economy in Bangladesh the premium income of SBC is also increasing day by day.

RISK IMPROVEMENT SERVICES

As the only state owned General insurance and re-insurance enterprise in Bangladesh Sadharan Bima Corporation has extended its support to the insurance market in Bangladesh in a extended way. Sadharan Bima Corporation would always endeavor to deliver the best customer services for the fulfillment of insurance, reinsurance and risk management needs and problems to the insurance market in Bangladesh.

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On the order hand, Sadharan Bima Corporation provides risk improvement services to its valued clients through :

a) Pre-underwriting inspection services.

b) SBC has the opportunity to take the necessary help and advice from the foreign reinsurer regarding risk improvement techniques.

c) SBC regularly enlists professional and expert surveyors to asses risk and loss before and after loss. It may be mentioned that license for the survey firms are issued by the office of the Chief Controller of Insurance, Government of the Peoples’ Republic of Bangladesh.

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CHAPTER-4RISK MANAGEMENTDefinition of risk: This is a term which refers to the probable disadvantageous, undesirable, or unprofitable outcome of fortuitous event, an event which is not desired, but nevertheless taking place. According to the Dictionary:

“Risk refers to the probability that something unpleasant or dangerous might happen.

“Risk is a condition in which there is a possibility of an adverse deviation from a desired outcome that is expected or hoped for”

“At its most general level, risk is used to describe any situation where there is uncertainty about what outcomes will occur. Life is obviously risky.”

For example: We usually say risk of death and not risk of survival as death is something which is never desired.

Types of risk: Financial $ Non-financial risk: That someone is adversely affected by the happening of an event.

1. The asset or income is likely to be exposed to a financial loss from the occurrence of the event.

2. The peril can cause the loss.When the possibility of a financial loss doesn’t exit, the situation can be referred as non- financial risk.

Fundamental risk: It affects the economy or its participants on a macro basis. They affect most of the social segments or the entire population.

Particular risk: These are confined to individual identities or small groups. Theft, robbery fire etc are particular in nature.

Pure risk: There is possibility of loss or no loss. There is no gain to the individual or the organization.

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Speculative risk: There is possibility of gain as well as loss. The element of gain is inherent or structured in such a situation.

Dynamic risk: These Risks are those resulting from the changes in the economy or the environment. These refer to the macro economic variable. These are difficult to anticipate And quantify.

Static risk: These are more or less predictable and not affected by the economic condition.

Quantifiable and quantifiable risk: This can be measured like financial risks are non quantifiable while the situations which may result in repercussion like tension or loss of peace are called as non –quantifiable.

Risk management: “Risk management is an integrated process of delineating specific areas of risk, developing a comprehensive plan, integrating the plan, and conducting the ongoing evaluation.” -Dr. P. K. Gupta “Risk Management is the process of measuring, or assessing risk and then developing strategies to manage the risk.” -Wikipedia “Managing the risk can involve taking out insurance against a loss, hedging a loan against interest-rate rises, and protecting against a fall interest rates. -Oxford Business Dictionary

Risk measuring tools:The process of managing risk is to measure potential risks. The risk

measurement tools are:- Chesklist method Financial statement method Flowchart method On-site inspection Interaction with others Contract analysis Statistical record of losses

Risk management process:

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1. Establish the context: It includes planning the process, mapping out the scope of

the exercise the identity and objectives of stakeholders, the basis upon which risks will be evaluated and defining a framework for the process, and agenda for identification and analysis.

2. Identification: Risk are about events that, when triggered, will cause problem. Hence, risk identification can start with the source of problems. It includes –

A. Source AnalysisB. Problem AnalysisC. Event

3. Assessment: They must be assessed as to their potential severity Of loss and to the probability of occurrence. It is critical to make the best educated guesses possibility in order to properly prioritize the implementation of the risk management plan.

Rate of occurrence x Impact of the event = Risk 4. Potential risk treatment: Once risk have been identified and assessed all techniques to manage the risk fall into one or more of these four major categories:

A. Risk transferB. Risk avoidanceC. Risk retentionD. Risk control

Ideal use of these strategies may not be possible. Some of them may involve trade offs Those are not acceptable to the organization or person making the risk management decision.

5. Create the plan: The risk management plan should propose applicable and effective security controls for managing the risks. It should contain a schedule for control implementation and responsible persons for those actions. The risk management concept is old but is still not very effectively measured.

6. Implementation: Follow all of the planned methods for mitigating the effect of the risks. Purchase insurance policies for the risks have been decided to be transferred to an insurer, avoid all risks that can be avoided without sacrificing the goals, reduce others, and retain the rest.

7. Review and evaluation of the plan: The risk management plans will never be perfect. Practice, experience, and actual loss results, will necessitate changes in the plan and contribute information to allow possible different decisions to be made in dealing with the risk being faced.

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5 insurance prician and claim settlement

Insurance marketing and teinsurance

5.1 pricing tools:

Sadharan Bima Corporation uses the following pricing tools:

1) Law of large number of insurance2) Price elasticity of demand3) Break even analysis and target profit pricing4) Balue-based pricing for property and assets5) Cost- based pricing for property and assets.

5.2 Sadharan Bima Corporation measure how much risk is involved with the insurable item. If it bears high risk then they take high premium as well it bears low risk, then they charge low premium. There after, the also made pricing on expected loss. They also analyze the price demand relationship.While determining pricing, the also calculate

1) Single premium plan2) Level premium plan

5.4 Claim Settlement ProcedureWhile claim should be settled the following procedures have to be done.

1) Evidence: - before admitting claim relevant evidence in connection with the policy is required.

2) Notice of claim:- a prompt notice of claim is required. The receipt of notice or approval of the course of action taken by the insured does not mean that the liability of any loss in acknowledged.

3) Document required for claim:- these are required at the time of the claim.1. Certificate of insurance2. Bill of lading 3. Copy of protest4. Certificate of survey5. Account sales6. Letter of suvrogation

4) Extent of liability: - the insured can recover from the underwrite a loss to the extent of the insurable if it was an unvalued policy.Incase of a valued policy the assured can recover the loss to the full extent of the value fixed by the policy subject to the average clauses where there are two or more underverites, they shall bear the loss in the proportion of their subscription.It includes:1. Successive losses2. Other charges

Enquiry:-If the enquiry results are positive and proper submission of all the necessary documents is done than Sadharan Bima Corporation settles the claims on the basis of total loss and partial loss.

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5.5 insurance marketing techniques

The process of analyzing marketing opportunities, selecting target market and managing the marketing effort is the techniques of Sadharan Bima Corporation. 1) Connecting with customers.2) Offer the customer.3) Shows the features of insurance of insurance policy.4) Benefits of having a policy.5) Proposing a good insured amount.

5.6 reinsurance management* Note: - There is some information about reinsurance in the annual report.

Sadharan Bima Corporation follows the quite share treaty and excess o loss treaty in case of reinsurance management. They also follow pool and syndicate method over facultative reinsurance.

5.3 pricing elementsAt the time of pricing elements are needed

1) Percentage of expected loss2) Number of person insured3) Claims to be settled 4) Present value of net claim5) Net single premium6) Net annual premium

6 trend analysis

Assets:

Change since based period = (current year amount- base year amount) / base year amount = (amount 2005- amount 2004) / amount 2004

= (60519086-6359721252) / 6359721252= (4.84%)

= (amount 2006- amount 2005) / amount 2005 = (6666182320-6051903486) / 6051903486= 12.16%

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Liabilities:

Change since based period = (current year amount- base year amount) / base year amount= (amount 2005- amount 2004) / amount 2004 = (349181954-3783199720) / 3783199720= (8.83%)

= (amount 2006- amount 2005) / amount 2005= (4023460788-3449181954) / 3449181954= 16.15%

Stock holders’ equity:

Change since based period = (current year amount- base year amount) / base year amount= (amount 2005- amount 2004) / amount 2004 = (2602721532-2576521532) / 2576521532 = 1.02%

= (amount 2005- amount 2004) / amount 2004 = (2642721532-2602721532) / 2602721532

= 1.54%

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Common size analysis statement

Particulars Amount 2006

Percentage 2006

Amount 2005

Percentage 2005

Amount 2004

Percentage 2004

Assets

CurrentLong term Fixed

1662438794 24.94% 1433882110 23.69% 1272233727 20.00%4934724236 74.02% 4555984619 75.28% 503815168 79.22%69019290 1.04% 62036757 1.03% 49337357 0.78%

Total 6666182320 100% 6051903486 100% 6359721252 100%

Liability Current Long term

2009397045 49.94% 1713000137 49.66% 1425160485 37.67%2014063743 50.06% 1736181817 50.34% 2358039235 63.33%

Total 4023460788 100% 3449181954 100% 3783198720 100%

Stock holders equity

Paid up share certificate

100000000 3.78% 100000000 3.84% 10000000 3.88%

Contingency account

2542721532 96.22% 2502721532 96.16% 2476521532 96.12%

Total 2642721532 100% 2602721532 100% 2576521532 100%

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SWOT analysis:

Every company must have some strengths, weakness, opportunity & threat. The best portfolio is the one that best fits a company’s strength, weakness to the opportunity in the environment.Sadharan Bima Corporation always tries to put strong service into its more profitable business & drop its weaker ones. It also hunts for its opportunities. & try to overcome its threat.

S W O T

Strength Weakness Opportunity Threat

Strength:1. Gigantic structure all over the country.2. Large number of capital.3. Bigger amount of insurance and reinsurance.4. Proper allocation of human resources.5. Proper settlement of claim.6. It is the sole government general insurance company.7. It is always solvent.8. It has a history of higher competency in fire insurance sector.

Weakness:1. Time management tactics to be more efficient.2. It could improve the publicity system.3. Introduction to latest business technology.4. Proper utilization of human resources.5. Publicity of the private companies is few steps ahead.6. High cost and risky investment.

Opportunities:

1. To spread in the foreign countries.2. Ensuring every level of assets.3. To be a pioneer company.4. Becoming the best insurer in general and reinsurance sector.5. Combining all the small and big organizations with in the country.6. Joining everyone so that the risk would fall.7. Data analysis and data record could be improved by new technologies.8. As it is a statutory company it gets the benefit of any financial changes before any

other organization.

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Threats:1. A barrier such as formality in case of decision making.2. Obstacles of expansion3. All the private companies can take over.4. Mass publicity and new technology of the rival companies.5. Unstable political condition.

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5.1 RATIO ANALYSIS: the ratio analysis is a widely used technique to evaluate the financial position and performance of a business ratio analysis is a process of identifying the financial strengths and weaknesses of the firm. We may classify ratio analysis into the following four.

- Liquidity Ratio: liquidity ratio measure the firm’s ability to meet current obligations and are, calculated by establishing relationships between current assets and current liability ratio:

1.) Current ratio: current ratio is calculated by dividing current assets by current liability.

For 2006

For 2005

For 2004

For 2003

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2.) Acid test ratio: the ratio establishes a relationship between quick or liquid, assets and current liabilities is called acid test ratio.

For 2006

For 2005

For 2004

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- Profitability Ratio: Profitability measure the overall performance of the firm by determining the effectiveness of the firm in generating profit and are between profit figures on the one hand, and sales and assets on the other.Profit margin: the first profitability ratio in relation to sales is the gross profit margin. It is calculated by dividing the gross of profit by sales:

For year 2006

For year 2005

For year 2004

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- Asset turnover: this measures how efficiently assets are use to generate sales.

For year 2006

For year 2005

For year 2004

43

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Return on assets

For year 2006:

For year 2005:

For year 2004:

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Solvency ratio: Debt ratio:-

For year 2006:

For year 2005:

For year 2004:

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Sensitivity analysis:

Cash flow from operating activities:

2004 2005 Deviation 2006 Derivation348400288 363763510 4.41% 420385229 20.66%

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Net cash flow from operating activities:

2004 2005 Derivation 2006 Derivation185500605 241335133 30.1% 179461186 (3.26%)

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Net cash flow investing activities:

2004 2005 Derivation 2006 Derivation259104127 164980901 (36.33%) 41147751 (84.12%)

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SCENARIO ANALYSIS:

Suppose gross profit will change by 25% in best and worst case

Particulars Best case Base case Worst caseGross profit

Less: operating and financial expenses

Other income

214695098

(48547667)

297176818

171756078

(48547667)

297176818

128817058

(48547667)

297176818Net profit before taxationLess: income tax paid

463324249

(120000000)

420385229

(120000000)

377446209

(120000000)

Net profit after tax

Accumulated depreciation

343324249

(14961071)

300385229

14961071

257446209

14961071

Cash flow

Less: surplus of profit paid to the government

328363178

198208550

285424158

198208550

242485138

198208550

Net cash flow 130154628 87215608 44276588

Expected cash flow =∑ (cash flow x probability index)= (130154628 X 0.25 +87215608 X 0.5+44276588 X 0.25)=87215608

Standard deviation =√ {(net cash flow – expected cash flow)2 × profitability index}=√ {(130154628-87215608)2 × 0.25 +(87215608-87215608)2 × 0.5 + (44276588-87215608)2 × 0.25}=30362472

Coefficient of variance = (standard deviation / expected cash flow) × 100= (30362472 / 87215608) × 100 = 35%

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Cross section analysis:

In cross section analysis we have compared the Sadharan Bima Corporation to the Pioneer Insurance Company which is a private company.

Pioneer Insurance Company

Gross premium VS net premium (in crore)

Sadharan Bima Corporation

In the above graph we can see that the increase in the net premium comparing to the gross premium is higher than Pioneer Insurance Company.

So we can say that the net claim paying ability of Sadharan Bima Corporation is higher than Pioneer Insurance Company.

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Conclusion:

Sadharan Bima Corporation is a government owned company that has been working in the country as a leading general insurance company. It has a lot of responsibility as for being the biggest insurance sector of general site. High capital and all the reinsurance promises are well defined and they are still proving their evidence of competency we can surely say that they are the future of general insurance sector in Bangladesh. Sadharan Bima Corporation has the upper hand in the government sector. Where the government needs profit from its own Sadharan Bima Corporation’s annual report showed the amount clearly. They are well figured amount that is being added to the fund of government’s wealth.

Recommendation:

There are some sectors that require some close attention and other things such as time and pace. Sadharan Bima Corporation is a large company and it has to follow a lot of things and system which makes them little slow when it comes to prompt decision making. All the other thing are very natural like the disadvantages that a gigantic organization faces.

Bibliography

1. Annual report 2005-62. Accounting principles and analysis3. Financial analysis and financial management4. www.sbc.gov.bd5. www.bangladeshtredinfo.com

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Documents

Sbc Body DONE01