Executive Summary. The Background of the Company:

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1 Executive Summary Dhaka Insurance Co. Ltd. is a renowned business company in the insurance arena of Bangladesh which has been established about twelve years back. It was then named as The Loyeds Insurance Limited. The name was changed to Dhaka Insurance Limited in the year The company was built to perform all kinds of general insurance activities under company act The company is now operating its business throughout the country with eighteen of its branches in four divisions. The financial highlights of the company inform that the company was not so fast growing insurance firm before But throughout the last two years, the company is experiencing a great growth in its business field. Compared to the earlier years the company now has better management system, better client service and better goodwill in the clients of the organization. Besides, the company has now greater risk analyzing policy that helps the company to measure the premium properly. It helps the company to attain greater profitability. The greatest growing sector of the organization is the underwriting job. Other than insurance business the company is now also engaged in secondary share business. The lion share of the previous two-year profit of the company is the contribution of investment profit from capital market. Moreover, the company s insurance sector is now showing better performance than the earlier time. Some selective underwriting and prompt settlement of claims have contributed towards building up a very respectable image of the Company within related the business community. Since its establishment in 2000, the company is performing its business with great skill which has made the company one of the leading insurance companies in Bangladesh. Within such short life span of only eleven years the company has been able to achieve the trustworthiness and fame in the insurance industry of Bangladesh. In Bangladesh insurance business is a very challenging sector as people of this country is not so much interested in insurance. Moreover, political condition, natural risks, unawareness of people etc. have made the insurance business more complicated in this country. Still Dhaka Insurance Co. Ltd. has been able to create its business image in its business community overcoming all hinders. The Background of the Company: Dhaka Insurance Co. Ltd. was incorporated as a public limited company in Bangladesh on 4 th January, 2000 under the Company Act, 1994 for carrying insurance business other than life 1

2 M A a d n v a i g s o n r g D e c o r insurance. This company started with 5 sections in February, The company went into Initial Public Offering (IOP) in The initial paid up capital of the company was BDT 60 million which has been increased by BDT 150 million when the company had entered into the Security Exchange and Commission (SEC) list to meet the rapid growing insurance industry in Bangladesh. In the year 2009 the company was enlisted to raise an amount of BDT 108 million in exchange of 0.9 million ordinary shares to the ordinary people. At the end of June 2011 the paid-up capital has been again increased to BDT 300 million. Now this company operates its business with a country wide network through eighteen branches. The current situation of the company: Dhaka Insurance Ltd. has experienced a successful business year by the right directions of the directors and dexterous direction of management authorities. Now it s being recognized as one of the most developing as well as establishing insurance companies in the insurance business. The directors and the management authorities are working very hard to establish it as first rowed insurance company. Experienced management, good customer care, fast settlement of insurance demands, and achieving trusts of customers-we believe these are ways of company s success. MANAGEMENT OF THE COMPANY Insurance businesses are the service providing business. These businesses are directly controlled by certain authority within the frame of country s Act and regulations. Dhaka Insurance Co. Ltd. has been inaugurated following The Company Act, 1994 and its whole business activities are performed under Insurance development M D e p u t y M a n g i n g D i r e c t o r & C h i e f F i n a n c i a l O ffi c e r ( 1 ) 2

3 and regulatory authority (IDRA). The company agrees to compensate loss of insured property with each policy terms in consideration of premium. In this case the higher the risk of damage associated with the property, the more the premium will be. The Management Team: The managing director of this company is the chief executive of the company and management runs under his direct control. He is accountable to the board of directors of the company. The company has a skilled management team consisting CFO, Company secretary, Head of Underwriting, claims and re-insurance assists managing director and supervises the day to day departmental works. The organizational chart of the company is Organizational Chart of Dhaka Insurance given here. Ltd The Agent Team: The executives and officers of development wings are those who are directly related to contact with clients for procurement of business who are the vital part of the company. They offer service to the policy holders directly and management supports them through quick settlement of the claim. This team is the communication medium between the company and the clients. Besides using their given information the company is continuously changing its insurance policies. The Investigation Team: They have to use their own investigation team in case of the damage to the insured properties by the company. This team finds out the damage and takes preparation for the required compensation. Human Resource Management: This company follows a standard forms to recruit employees. There is no priority of the dictation of the top level executives. The Management of this company used to encourage its employees awarding each bonus, special increment and promotion based on their personal performance. Moreover some selected personnel of the company monitor the activities of the employees and arrange professional training for improvement of the employees. SWOT Analysis: 3

4 Strength Weaknesses Good solvency Low capital base Good financial performance Exposed to equity market risk Experienced management team IT infrastructure at primary stage Improved underwriting leverage Small market share Management expenses beyond allowable limit. Opportunities Expansion of branch network Online policy sale Product diversification Threats Too many companies in small market Emergence of foreign companies ICT service in all operations Compliance of new insurance. KEY FINANCIAL TERMS: The Financial Statements have been prepared in accordance with Bangladesh Accounting Standard (BAS). It has shown true and fair value of the company as of 31 st December The operations and the cash flow statements have been prepared for the year ended and obeying the Companies Act, 1994, the Insurance Rules in 1958, the Securities and Exchange Rules, Basis of Preparation of Accounts & Significant Policies: 1. Basis of Preparation: The Accounts have been prepared following the historical cost convention. Figures have been rounded off to the nearest Taka. Transactions made under foreign currency have been transferred to Bangladeshi Taka. 2. Significant Accounting Policies: a) Depreciation of fixed assets: It has been calculated in accordance of the diminishing balance method at the rate of between 10%-20% depending on the useful life. b) Valuation of Assets: It has been set at their respective book value as at 31 st December c) Going Concern Concept: As the company is optimistic to continue the business, the financial statements of the entity have been prepared under going concern concept. d) Insurance Scheme: Employees of the company are covered under the group term life insurance scheme. 4

5 3. Investment (At Cost): Taka 9,000,000 The amount above represents the company s investment in the past ten years BGTB s, held as a statutory deposit under the Insurance Act, 1938 in Bangladesh Bank. Interest accrued on the Investment has been accounted for. Financial Highlights Two years key operating and financial data of the Company Taka in million Sl. No. Particulars Gross Premium Income from Investment Net Claim Paid Net Profit before Tax Paid-Up Capital Shareholders Equity Total Reserve Fund Total Investments Total Assets Rate Of Dividend 100% (Stock) 15% (Cash) 11 Earnings per Share Net Assets Value per Share CASH FLOW STATEMENT FOR THE YEAR ENDED 31st DECEMBER 2010 Particulars Taka 2010 Taka 2009 Net Cash Flow From Operating Activities 164,172,822 58,225,244 Net Cash Used In Investing Activities -103,072,521-2,979,862 Net Cash Flow From Financial Activities -5,422,940,737-5,516,646,000 Net Increase In Cash and Bank Balance -5,361,840,436 5,571,891,382 Cash and bank balance at beginning of the year 5,726,474, ,583,021 Cash and bank balance at end of the year 364,633,967 5,726,474,403 5

6 PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31st DECEMBER 2010 Particulars Taka 2010 Taka 2009 Interest, Dividends And Rents 27,345,907 12,594,521 Profit/(Loss) Transferred 6,152,860 24,974,655 Other Income 164,400,785 64,102,294 EXPENSES OF MANAGEMENT -6,619,249-4,722,138 Balance for the year carried forward to appropriation account 191,280,303 96,949,332 PROFIT AND LOSS APPROPRIATION ACCOUNT FOR THE YEAR ENDED 31 st DECEMBER 2010 Particulars Taka 2010 Taka 2009 Transfer from Reserves and Taxation 36,573,058 96,108,510 Balance Transferred to Balance Sheet 158,322,690 3,615, ,895,748 99,273 Balance transferred from profit and loss account 191,280,303 96,949,332 Balance brought forward from previous year 3,615,445 2,774,623 Total 194,895,748 99,723,955 BALANCE SHEET AS AT 31 st DECEMBER 2010 CAPITAL AND LIABILITIES Taka 2010 Taka

7 Authorized Capital 2,000,000 Ordinary Shares Of Tk100 Each 200,000, ,000,000 Issued, subscribed and paid up capital 168,000,000 60,000,000 Reserve or contingency accounts 113,572, ,999,826 Profit and loss appropriation account 158,322,690 3,615,445 Balances of funds and accounts 41,487,663 32,494,755 Premium deposits 63,237,582 34,428,480 Estimated liability in respect of outstanding claims whether due or intimated Amounts due to other persons or bodies carrying on insurance business 95,517,825 86,731,470 49,968,974 44,008,796 Provision for taxation 54,600,000 27,600,000 Proposed dividend - 22,500,000 Sundry creditors 23,754,413 5,534,153,418 TOTAL 768,462,031 5,949,532,190 PROPERTY AND ASSETS Investments at cost 173,461, ,857,558 Interests, dividends, and rent outstanding 5,457,156 5,874,267 Amounts due from other persons or bodies carrying on insurance business 6,916,050 4,086,020 Sundry debtors 85,507,359 33,847,851 Cash and bank balances 364,976,999 5,726,710,040 Other accounts 132,142,476 16,156,454 TOTAL 768,462,031 5,949,532,190 THE MARKETING STARTEGIES AND TECHNIQUES OF THE COMPANY: To be competitive in the market, insurance companies need to develop new products and offer excellent clientele services and also to expand the market by bringing more and more items under the purview of insurance otherwise the competitors may take away existing company s business. Insurance business is increasing globally. New items are coming under the cover of 7

8 various insurances as days pass by; the market is expanding as people are realizing the importance of insurance. Dhaka Insurance Co. LTD provides excellent services and plan to introduce new products giving importance on Research and Development (R&D) considering market & technology related risks. Dhaka Insurance LTD has been operating in a small market competing with as many as fortythree general insurance companies including Green Delta Insurance Company LTD, Reliance Insurance Company LTD., Progoty Insurance Company LTD, Peoples Insurance Company LTD, Pioneer Insurance Company LTD, Rupaly Insurance Company LTD, Federal Insurance Company LTD, Prime Insurance Company LTD. So to stay in the market, we are following some marketing strategies. 1. ADVERTISING: It s important to attract the customers to the company. In order to that the company is taking some steps to make the company more popular and known to all, like Seminars: In order to introduce the company to others, sometimes by arranging seminars. The company also invites some companies to show them that why they should come to us. There the company also introduces the new plan and product to them to gain more interest. Media: The company is using media as a power. It has prepared different tips of add through television to influence others to come to the company. Sometimes it sponsors different programs to spread the name of the company through TV shows. Fair: At the end of every year, a corporate fair takes place in very popular places for example in Bangladesh Trade Fair. The company intends to set stalls there and introduce others the offers. 2. Customers: Complete satisfaction of the customers is the first priority of the company. It s offering a friendly environment to and proper service all of the clients. It is important to earn the customers trust. As most of the customers are from spinning industry, garments, textiles industry, oil industry, shipping etc. it makes sure that they get what they want and what they expect from the company. It tries to make sure that it keeps its words. The company makes everything articulate to the customers, so that they don t have any 8

9 questions about the company. That s to make a good impression to the present and future customers. 3. Shareholders: Shareholders are one of the important parts of the company. At first, the company has to make sure that the rate of the stock exchange remains profitable, so that more people feel interest to buy the shares. In order to get more shareholders the company takes some steps which we are following last from the beginning of our company. Profit: The company gains profits by using money of the clients in various sectors in order to make benefit out of it. As the profit is gained from it, the company divides them among the shareholders according to their lots and keeps only 5% to 6% of the profit for its company. Annual General Meeting (AGM): It is the annual meetings that take place at the end of the every working year. There, it shows the annual financial report including the last profit and revenue it made and give the interested share buyers as much as information they want so that they can decide whether they are going to buy our share or not. Conclusion Dhaka Insurance Company Ltd., a partly private and public company, has been a successful company over the years. On the basis of its increasing gross premium, income from investment etc., and proper management, it s expecting to uphold its position and market share in the market. Despite of its risks and flaws, the company, along with the rules and regulations of the company policy, would be able to provide services to the clients whenever necessary. References: 1. A.Q.M Wazed Ali, Managing Director, Dhaka Insurance Co. Ltd., Md. Abul islam, Deputy Managing Director, Dhaka Insurance Company mited_swot_analysis_bac.html

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