Company Overview

About the Company

Pioneer Insurance Company Limited (PICL) was sponsored & founded in 1996. It is a publicly
traded company, having authorized capital of Tk. 1 Billion and has paid up capital of Tk. 699.81
million. PICL’s stocks are enlisted with both Dhaka Stock Exchange and Chittagong Stock
Exchange. It has the distinction of declaring dividend every year since inception, and this, along
with several other factors has helped PICL to get the “AAA” rating by Alpha Credit Rating
Limited Company. It has also won the ICMAB Best Corporate Award for 4 years
PICL Provides its services to prominent national and multinational companies operating in
Pharmaceutical, Chemical, Textile, Cement, Services (Tele Communication, Hospitals, Hotels),
Energy, Manufacturing, Engineering, Banking and Financial sectors.
Company operations

Company Investments
From Table 1(Appendix 1) , we see that PICL has invested a total of 1,187.3 million taka: 785.7
million taka in banks, while 401.6 million taka is invested in various shares
 Findings
We mainly used 2 standards of comparison to compare and evaluate the performance of the
company: ‘Time Series Analysis’ and ‘Cross-Sectional Analysis’. We calculated the following
ratios:
Leverage ratios

 Debt ratio

Activity ratios

 Asset turnover ratio

Underwriting Ratios

 Loss Ratio

Profitability ratios

 Net profit margin

 Return on investment(ROI)
 Return on equity(ROE)
 Earnings per share
 Book value per share
Time Series Analysis

Under this standard of comparison, we compared different ratios of the company from year to year.
We gathered annual reports of 5 years, from 2013 to 2017, to calculate and compare.

Debt Ratio:

Total Liabilities
Debt ratio =
Total Assets

Year 2013 2014 2015 2016 2017

Debt Ratio 0.41 0.41 0.31 0.30 0.28

For 2017, creditors financed 28% of the company and owners financed the rest 72%

Asset Turnover Ratio:

Since the sales of premiums are not exclusively mentioned in the financial statement, net sales
have been taken as the sum of the revenues in the four policy accounts

Net Sales
Asset turnover ratio =
Total Assets

Year 2013 2014 2015 2016 2017

Asset
Turnover
0.13 0.10 0.08 0.06 0.05
Ratio

For 2017, the company is generating 0.05 units of sales from 1 unit of capital employed in totl
assets

Loss ratio
 Net claims incurred
Loss Ratio =
Total collected premium

Year 2013 2014 2015 2016 2017

Loss ratio 0.32 0.34 0.38 0.40 0.33

In 2017, for every 1 taka of premium collected, PICL paid out 0.33 taka of claims

Net Profit Margin:

Net profit
Net profit margin =
Sales

Year 2013 2014 2015 2016 2017

Net Profit
Margin 83% 87% 92% 90% 108%

For 2017, PILC earned 108 taka of net profit for every 100 taka of policy sold

Return on Investment:

Net Profit
Return on investment =
Total Investment

Year 2013 2014 2015 2016 2017

ROI 82% 76% 35% 25% 19%

For 2017, the company earned 19 taka for every 100 taka of investments.
Return on Equity:

Net profit
Return on equity =
Total Equity

Year 2013 2014 2015 2016 2017

ROE 18% 15% 10% 8% 8%

For 2017, the company earned 8 taka for every 100 taka of equity invested.
Earnings Per Share:

Net profit
Earning per share =
Number of shares outstanding

Year 2013 2014 2015 2016 2017

EPS 5.02 3.9 3.01 2.55 3.43

For 2017, the company earned 3.43 taka per share.

Book Value Per Share:

Total common stockholder ′ s equity

Book value per share =
Number of common shares

Year 2013 2014 2015 2016 2017

Book value
28.06 26.33 29.65 31.6 41.71
per share
 For 2017, common shareholders will receive 41.71 taka per share if the firm dissolves

Profitability of various insurance policies

Policy Account 2013 2014 2015 2016 2017

Fire Revenue
-43,172,997 -48,538,881 -151,147,657 -58,476,618 -103,486,693.00
Account
Marine Revenue
194,307,204 176,000,075 171,785,103 84,129,740 130,894,037.00
Account
Motor Revenue
90,134,998 103,742,755 137,694,224 144,442,916 150,930,759.00
Account
Miscellaneous
13,754,710 -3,671,271 50,145,710 28,063,228 43,490,522.00
Revenue Account
 Analysis

Revenue from various policies

300,000,000

200,000,000

100,000,000

0
2013 2014 2015 2016 2017
-100,000,000

-200,000,000

Fire Revenue Account Marine Revenue Account

Motor Revenue Account Miscellaneous Revenue Account

As we can see, the revenue generated from the Fire Insurance policies have been constantly
negative for the last 5 years, with the revenue steeply decreasing from 2016 onwards. Referring
to table 2 and table 3 (Appendix 1), we see that claims due to fire incidents have steadily been
more than all the other policies. In fact, 40 of the 48 biggest claims pad by PICL have been due
to fire incidents. Underwriting for fire policies has since then been improved and has risen from
2016. Although it fell in 2017, it didn’t fall as down as previous years
The other policies are however, profitable, and more than make up for the loss coming from fire
incidents. Losses due to motor accidents have been significantly reduced and has been the most
profitable sector of the company. Marine policies caused a severe loss in the year 206 but since
then has got back up to the previous levels. Miscellaneous policies, too have contributed steadily
to the profitability of the company

The recent decrease in the loss ratio further corroborates in the increasing effectiveness of the
underwriting. Currently they only pay 33 taka of claims for every 100 taka of premiums
collected. The effective underwriting techniques of the insurance policies excluding fire has
helped to keep the loss ratio down

Although the return on investment has been decreasing steadily, net profit margin has also risen
steadily in the same period. It can be concluded that the increase in net profit has been bought
about by effective underwriting, hence increasing underwriting profit
From Table 1 (Appendix 1), it’s seen that PICL has almost exclusively invested in shares only.
Although the shares invested in are of good quality, perhaps dividend is paid irregularly,
contributing to low returns from investment.

Due to management’s efforts in improving underwriting, the earnings per share has started to
increase finally after 4 years of downward trend. As mentioned before, PICL has paid dividend
every year since its incorporation, and its shareholders are in an ever secure position financially.
Even if the company were to dissolve, the shareholders would get a record high amount of
money compared to before. The management’s efforts have helped in achieving efficiency and in
ensuring that the equity sources of fund are properly utilized, thus maximizing shareholder
wealth
Since 2014, PICL has started to focus more on equity sources to finance its activities than debt
sources. Correspondingly, the return on equity has been decreasing, but this doesn’t necessarily
indicate poor financial health.
As seen from the EPS and BPS ratios, the value of the shares is at a high. From the year 2016,
the year underwriting was improved, the decrease in ROE was stabilized
ROE had also decreased in the same period that the debt ratio had decreased, it can be assumed
that ROE has declined due to a greater contribution of equity sources to the company’s funds
rather than decreasing sales

Although total asset turnover is steeply decreasing, it is not a strong indicative of poor
management by the company, since it is a service company. PICL opened a huge new head
office in 2013, which has steeply and suddenly increased the value of its assets. Although the
policy saleshave been increasing every year, it hasn’t been as steep as the sudden increase in
assets, which is why the total asset turnover seems to be decreasing sharply here
 Appendix – 1
Investment (Taka in Million)

Bangladesh Govt. Treasury Bank 25.00

Fixed Deposit with Scheduled Bank 760.70

Share Investment :

Mutual Trust Bank Ltd. (3,09,49,932 shares) 224.10

The ACME Laboratories Ltd. (10,08,030 shares) 52.70

Central Depository Bangladesh Limited. (2,56,945 shares) 2.60

Grameenphone. (573,100 shares) 77.60

Malek Spinning Mills Ltd. (12,10,000 shares) 29.50

Secondary share 15.10

Grand Total (Taka) 1,187.30

Table 1 – Investments made by Pioneer Insurance Company Ltd.

2012 2013 2014 2015 2016 2017 2018

Fire 215,367,819 1,636,559,223 414,781,825 245,466,275 539,309,482 61,718,459 90,192
Marine 33,342,689 59,717,975 35,510,765 46,204,585 245,662,983 68,207,393 2,432,310
Motor 61,993,767 67,525,907 67,068,854 72,061,917 55,112,767 32,535,681 1,479,914
Misc. & Accident 86,380,359 33,873,092 31,548,880 17,746,444 15,404,687 5,062,475 227,308
Total Tk.= 397,084,634 1,797,676,197 548,910,324 381,479,221 855,489,919 167,525,008 4,229,724
Total No. of
990 1,072 1,094 1,204 1,070 753 31
Claims Settled
Claims
Nil Nil 6 18 87 210 67
Outstanding

Table 2 – Claims statement From 2012 to March - 2018

Sl No. Class of Loss Name of Insured Year Settled Amount (Taka)

1. Fire Aswad Composite Mills Ltd. 2013 1,479,506,490

2. Fire .
Zaber & Zubair Fabrics Ltd. 2014 15,24,22,791

3. Fire Alema Textiles Ltd 2016 14,13,16,133

4. Marine Cargo Bashundhara Food & Beverage Ltd. 2016 11,27,64,442

5. Fire Matin Spinning Mills Ltd. 2008 92,944,709

6. Fire Asia Composite Mills Ltd. 2012 86,090,707

7. Fire Kader Compact Spinning Ltd. 2015 78,567,108

8. Marine Hull Ratanpur Shipping Line Ltd. 2012 75,372,256
Sl No. Class of Loss Name of Insured Year Settled Amount (Taka)

9. Fire Square Consumer Products Ltd. 2007 75,172,582

10. Fire Vidyut Bangladesh (Pvt.) Ltd. 2009 69,836,239

11. Fire Natore Agro Ltd. 2014 57,672,814

12. Fire ACI LTD. 2011 50,480,170

13. Fire Confidence Edible Oil Ltd. 2012 50,456,875

14. Fire Apex Footwear Ltd. 2002 46,817,019

15. Fire Sun Gravures Ltd. 2006 45,597,518

16. Fire Pioneer Apparels Ltd. 2006 40,409,331

17. Fire Shahnewaz Jute Mills (Pvt.) Ltd. 2012 39,862,091

18. Fire Markup Cotton Spinning Ltd. 2011 38,143,399

19. Fire Shahnaz Jute Beiling (Pvt.) Ltd. 2013 36,466,875

20. Misc. Regent Power Ltd. 2012 35,966,109

21. Fire Abul Khair Steel Melting Ltd. 2014 34,458,475

22. Fire L.R. Jute Garden Ltd. 2013 28,262,576

23. Marine Hull Ratanpur Shipping Line Ltd. 2012 31,661,790

24. Marine Cargo GBB Power Ltd. 2010 26,817,138

25. Fire Quality Feeds Ltd. 2012 21,366,907

26. Fire Color City Ltd. 2013 18,556,800

27. Fire Thermax Yarn Dyeing Ltd. 2014 17,956,226

28. Fire Oshin Spinning Mills Ltd. 2014 16,592,922

29. Fire Diamond Egg Ltd. 2015 15,066,961

30. Fire Bashundhara Paper Mills Ltd. 2014 15,020,977

31. Fire Anlima Textile Ltd. 2014 14,102,598

32. Fire Rahimafroz Globatt Ltd. 2014 13,984,847

33. Fire Apex Adelchi Footwear Ltd. 2013 11,240,811

34. Fire( Flood) Dai-Ichi-Pex Leather Industries Ltd. 2005 10,894,774

35. Fire Ahad Jute Spinners Ltd. 2013 10,686,489

36. Fire CSCR (Pvt.) Ltd. 2014 10,266,369

37. Marine Hull Basundhara Logistics Ltd. 2010 10,000,000

38. Marine Cargo Square Pharmaceuticals Ltd. 2003 9,963,650

39. Fire Confidence Salt Ltd. 2012 9,968,051

40. Fire The Delta Spinning Mills Ltd. 2012 9,558,000

41. Fire Waseq Textile Mills Ltd 2015 9,523,473

42. Fire Tangail Jute 2104 8,360,000

Sl No. Class of Loss Name of Insured Year Settled Amount (Taka)

43. Fire Robi Axiata(BD) Ltd. 2015 7,985,663

44. Marine Cargo Shahjalal Newsprint Ind. Ltd 2000 7,970,196

45. Fire Noman Terry Towels Mills 2014 7,781,075

46. Fire Sea Tex Ltd. 2012 7,743,603

47. Fire BRAC Bank Ltd. 2009 6,289,832

48. Misc. Ever Smart(BD) Ltd. 2012 5,695,000

Table 2 – Largest Claims settled by Pioneer Insurance Company Ltd.

 Appendix – II
Balance Sheet of Pioneer Insurance Company Limited (sourced from LankaBangla
Finance)