Comparative Financial Statement Analysis of Insurance Sector in Bangladesh: A Case Study on Akij Takaful Life Insurance PLC & Popular Life Insurance PLC.

Abstract

This research paper is a part of the thesis report Akij Takaful Life Insurance PLC for fulfilling EMBA degree requirement. The research topic is “Financial Analysis Statement of Akij Takaful Life Insurance PLC”. This topic was assigned by Dr. Md. Masud Rana, Associate Professor , of the thesis internal supervisor of the Sonargaon University. Akij Takaful Life Insurance Company emerged as the 1st full-fledged Islami Life Insurance Company in Bangladesh in 2000. ATLIPLC had taken a unique approach in doing business with focus on quality customer service and business growth with decentralization of operational activities through different service centers of the country. With that in view, the company have already opened 997 Offices including 10 Divisional Offices, 50 full- fledged Service Centers, 107 Zonal Offices and 10 Regional Offices in different places all over the country. It is committed to its Policyholders to settle the claims within the time frame. It has achieved rating A+ in the year 2011 by Credit Rating Information and Services Limited (CRISL), and Rating Agency Malaysia Barhad (RAM). The present study aims to examine the risk and profitability of Akij Takaful Life Insurance PLC (ATLIPLC) by properly establishing relationships between the items of the balance sheet and profit and loss account. There are 18 life insurance companies in Bangladesh. But the study has covered ten life insurance companies listed on Dhaka Stock Exchange (DSE). The study has been undertaken for the period of five years from 2008 to 2012 and the necessary data have been obtained from sample companies annual reports. The study has analyzed and interpreted the collected data with the help of different financial ratios and various statistical measures i.e., arithmetic mean (AM), standard deviation (SD), coefficient of variation (CV). For analyzing the profitability and risk of ATLIPLC, the study has used return on assets ratio (ROA), return on equity ratio (ROE), return on capital employed ratio (ROCE), profit margin ratio (PM) as indicators for appreciating the profitability and liquidity ratio (LR), solvency ratio (SR), financial operating ratio (OR) as indicators for appreciating the risk. The study has comparatively analyzed ATLIPLC‟s ratios with its competitors (PLIPLC), and Industry Average as used as benchmark. Finally, the conclusions and recommendations are drawn based on the study findings that though ATLIPLC is financially sound during the study period, they should consistently generate policyholders‟ surplus to remain viable in the long run.