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A REPORT ON
SANDHANI LIFE INSURANCE COMPANY LTD.
Submitted To
Samia Sultana Tani
Associate Professor,
Department of Finance,
Faculty of Business Studies,
University of Dhaka.
Submitted By
Section: B
No.
Name
Roll No.
Anik Sha
21-089
21-253
21-261
21-263
Mehedi Hasan
21-271
21-272
21-273
Robiul Islam
21-282
Date of Submission:
Comments
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LETTER OF TRANSMITTAL
15th December 2016
To
Samia Sultana Tani
Associate Professor,
Department of Finance,
Faculty of Business Studies,
University of Dhaka.
Dear Madam:
It is an honor for us to submit the Term Paper on QUALITATIVE AND
QUANTITATIVE ANALYASIS OF SANDHANI LIFE INSURANCE COMPANY
LTD. which is prepared as a partial requirement of the course named Insurance & Risk
Management (F-210) of BBA program under Department of Finance of the Faculty of
Business Studies, University of Dhaka.
We would like to convey our special thanks and gratitude to you for patronizing our effort &
for giving us proper guidance and valuable advice. We have tried our best to cover all the
relevant fields. We earnestly request you to call upon us if you think any further work should
be done on the topic that you have chosen for us.
Thank you and look forward to receiving your cordial approval of our submission.
Yours Sincerely,
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ACKNOWLEDGEMENT
In performing our report, we had to take the help and guideline of some respected persons,
who deserve our greatest gratitude. The completion of this project gives us much Pleasure.
We would like to expand our deepest gratitude to all those who have directly and indirectly
guided us in writing this assignment.
In addition, we would like to show our earnest gratitude to our course teacher Samia Sultana
Tani , course instructor of Insurance and Risk management , University Of Dhaka, to
introduce us to the methodology of this report. From the direct observation of the company it
is easy to understand the necessity of insurance in Bangladesh.
Many people, especially our classmates and team members itself, have made valuable
comment suggestions on this proposal which gave us an inspiration to improve our report.
We thank all the people for their help directly and indirectly to complete our report.
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EXECUTIVE SUMMARY
As a course requirement for Insurance & Risk Management (F-210) the report is on a
QUALITATIVE
AND
QUANTATIVE
ANALYSIS
OF
SANDHANI
LIFE
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TABLE OF CONTENTS
PART
Content
Introduction
PART-ONE
Quantitative Analysis
Liquidity Ratio
Leverage Ratio
Profitability Ratio
EPS
PART-THREE
Reference
7-8
PART- TWO
Page No.
22
Findings and Recommendations
Conclusion
References
10
10
11-16
18
19
20
20
21
26
28
29
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INTRODUCTION
In this chapter we tried to describe the origin of the report, objective of the report, scope and
limitations of the report.
METHODOLOGY
To prepare this report we have collected data from different published materials. Then we
have conducted a secondary study. After that we have prepared an informative and reliable
report. We also collect data from internet .This way we collected primary data from personal
visit of Sandhani Life Insurance Company. Thus we have used both primary and secondary
report to prepare this report.
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Policyholder
SLIC seeks to build an ever relationship with the policyholder by providing a qualitative
service.
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Employees
SLIC seeks to enhance employees skill, efficiency and make them more innovative and
dedicative by providing effective professional training and a highly motivated remuneration
package.
Shareholders
SLIC seeks to satisfy the shareholders by achieving consistent operating performance and by
disclosing transparent financial information.
Business Partner
SLIC seeks to maintain excellent relationship with its business partners.
Community
SLIC seeks to live up its responsibilities to the community by providing various types of
Philanthropic activities to play a supportive role to protect our social, cultural, environmental,
economical and national interest.
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Strategic Objectives
In order to achieve companys long-term goal, it has maintain a number of key business
objectives which are:
Prompt claim settlement;
Improve staff-client relationship;
Enhancement of employees skill and efficiency;
Maximize shareholders wealth through a sustainable return on their
investment;
Maintenance of social commitment;
Establishment of corporate governance.
Objectivity
We are committed to serve our clients and beneficiaries and conduct all business activities
according to the business principles.
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We are very much aware about the accuracy of all the calculation and evaluation by using the
report of the expertise and serve to the valued clients in timely manner.
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Premium:
An insurance premium is the amount of money that an individual or business must pay for
an insurance policy. The insurance premium is considered income by the insurance company
once it is earned, and also represents a liability in that the insurer must provide coverage for
claims being made against the policy.
Insurance Premium earned by Sandhani Life Insurance Companies are given below:
Year
2011
2012
2013
2014
Premium(In Million)
263.26
224.92
236.95
222.62
Interpretations: In 2011 the insurance premium of Sandhanis was 263.26 .But in 2012 it was
224.92.In 2013 it has improved and again falls in 2014.So there is no stable increase or decrease
in the collection of premium
Claim:
An insurance claim is a formal request to an insurance company asking for a payment based on
the terms of the insurance policy. The insurance company reviews the claim for its validity and
then pays out to the insured or requesting party (on behalf of the insured) once approved.
Insurance claims cover everything from death benefits on life insurance policies to routine health
exams at your local doctor. In many cases, third parties file claims on behalf of the insured
person, but usually only the person(s) listed on the policy is entitled to claims payment.
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Insurance Premium earned by Sandhani Life Insurance Companies are given below:
Year
Claim(In Million)
2011
71.8
2012
89.72
2013
129.88
2014
172.54
Interpretations: From the analysis we have found that in 2011,2012,2013& 2014 the insurance
claim was 71.8,89.72,129.88 & 172.54.It has been seen that the growth rate of claim is increasing.
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Quantitative Analysis of
SANDHANI LIFE INSURANCE COMPANY LTD.
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Liquidity Ratios:
Liquidity ratios measure a firms ability to meet its current obligations. These include:
Current Ratio:
Current Ratio = Current Assets / Current Liabilities
This ratio indicates the extent to which current liabilities are covered by those assets expected to
be converted to cash in the near future. Current assets normally include cash, marketable
securities, accounts receivables, and inventories. Current liabilities consist of accounts payable,
short-term notes payable, current maturities of long-term debt, accrued taxes, and other accrued
expenses. Current assets are important to businesses because they are the assets that are used to
fund day-to-day operations and pay ongoing expenses.
Year
Current Asset
Current Liabilities
2014
233108472
24,221,665
2013
224,316,611
22,420,079
2012
69,497,682
15,585,771
2011
132,675,654
18,265,453
Table: Current Asset to Current Liabilities
Current Ratio
9.62
10.00
4.45
7.26
Graphical Presentation:
Interpretation:
The current ratio for the year 2011,2012, 2013 & 2014 is 7.26, 4.45,10 & 9.62 respectively,
compared to standard ratio 2:1 this ratio is more higher which shows comparitively high short
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term liquidity efficiency at the same time holding more than sufficient current assets mean
efficient use of resources.
Sales to Working Capital:
Sales to Working Capital = Sales / Working Capital
Sales to working capital give an indication of the turnover in working capital per year. A low
working capital indicates an unprofitable use of working capital.
Year
Sales Premium
2014
2013
2012
2011
23695
22492
26326
25094
Working
Capital
20888
20189
53911
11441
Sales to Working
Capital
1.134383
1.114072
0.488323
2.19334
Working Capital:
Working Capital means a measure of both a company's efficiency and its short-term financial
health. The working capital is calculated as:
Working Capital= Current Asset- Current Liabilities
The working capital ratio (Current Assets/Current Liabilities) indicates whether a company has
enough short term assets to cover its short term debt. Anything below 1 indicates negative W/C
(working capital). While anything over 2 means that the company is not investing excess assets.
Most believe that a ratio between 1.2 and 2.0 is sufficient. Also known as "net working capital".
Graphical Presentation:
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Interpretation:
It is very clear from the above calculations that the working capital of the company is gradually
decreasing over the years, which does not show good short term liquidity efficiency. But in
2013 it is improved.
Leverage Ratios:
By using a combination of assets, debt, equity, and interest payments, leverage ratios are used to
understand a company's ability to meet it long term financial obligations. Leverage ratios measure
the degree of protection of suppliers of long term funds. The level of leverage depends on a lot of
factors such as availability of collateral, strength of operating cash flow and tax treatments. Thus,
investors should be careful about comparing financial leverage between companies from different
industries. For example companies in the banking industry naturally operates with a high leverage
as collateral their assets are easily collateralized. These include:
Debt Ratio:
Debt Ratio = Total Debt / Total Assets
The ratio of total debt to total assets, generally called the debt ratio, measures the percentage of
funds provided by the creditors. The proportion of a firm's total assets that are being financed
with borrowed funds. The debt ratio is calculated by dividing total long-term and short-term
liabilities by total assets. The higher the ratio, the more leverage the company is using and the
more risk it is assuming. Assets and liabilities are found on a company's balance sheet.
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Year
Total Debt
Total Assets
Debt Raito
2013
10127
11204
0.903874
2012
2011
9333
8318
10139
9037
0.920505
0.920438
2010
7302
7947
0.918837
Interpretation: In 2012 company had the maximum assets comparison to the total debts. In 2013 it
had been reduced drastically.
Debt to Equity Ratio:
Debt to Equity Ratio = Total debt / Total Equity
The debt to equity ratio is the most popular leverage ratio and it provides detail around the
amount of leverage (liabilities assumed) that a company has in relation to the monies provided by
shareholders. As you can see through the formula below, the lower the number, the less leverage
that a company is using. The debt to equity ratio gives the proportion of a company (or person's)
assets that are financed by debt versus equity. It is a common measure of the long-term viability
of a company's business and, along with current ratio, a measure of its liquidity, or its ability to
cover its expenses. As a result, debt to equity calculations often only includes long-term debt
rather than a company's total liabilities. A high debt to equity ratio implies that the company has
been aggressively financing its activities through debt and therefore must pay interest on this
financing.
Year
Total Debt
Total Equity
Debt-Equity Ratio
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2013
2012
2011
2010
10127
9333
8318
7302
898
806
707
639
11.27728
11.5794
11.76521
11.42723
Interpretation: SLI has the more debt proportion to the equity capital.In 2011 it had the highest
debt capital and in 2013 it has the lowest debt equity .
Long- term debt to equity ratio: A widely used measure of the balance between debt and equity
in the firms long term capital structure. The higher the ratio, the greater the companys leverage
is. Generally companies with higher ratios are thought to be more risky because they have more
liabilities and less equity.
Year
Total Equity
2013
1111
898
1.237194
2012
959
806
1.189826
2011
597
707
0.844413
2010
476
639
0.744914
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Interpretation: From the analysis of statements it is found that the equity is decreasing proportion
to long term debt.
Profitability Ratios:
Profitability is the net result of a number of policies and decisions. This section of the discusses
the different measures of corporate profitability and financial performance. These ratios, much
like the operational performance ratios, give users a good understanding of how well the
company utilized its resources in generating profit and shareholder value. The long-term
profitability of a company is vital for both the survivability of the company as well as the benefit
received by shareholders. It is these ratios that can give insight into the all-important "profit".
Profitability ratios show the combined effects of liquidity, asset management and debt on
operating results. These ratios examine the profit made by the firm and compare these figures
with the size of the firm, the assets employed by the firm or its level of sales. There are four
important profitability ratios that I am going to analyze:
Net Profit Margin:
Net Profit margin = Net Profit / Sales x 100
Net Profit Margin gives us the net profit that the business is earning per dollar of sales. This
margin indicates the profit after all the costs have been incurred it shows that what % of turnover
is represented by the net profit. An increase in the ratios indicates that a firm is producing higher
net profit of sales than before.
Table
Year
2014
Profit after
tax
602
Sales
23695
2.540620384
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2013
687
22492
3.054419349
2012
935
26326
3.551621971
2011
1724
25094
6.870168168
Return on Assets:
Return on Assets (ROA) = Profit after Taxation / Average Total assets x 100
ROA measures of a company's profitability, equal to a fiscal year's earnings divided by its total
assets, expressed as a percentage. This is an important ratio for companies deciding whether or
not to initiate a new project. The basis of this ratio is that if a company is going to start a project
they expect to earn a return on it, ROA is the return they would receive.
Simply put, if ROA is above the rate that the company borrows at then the project should be
accepted, if not then it is rejected.
Year
Total Assets
Ratio
2014
602
11190
5.379803
2013
687
11082
6.199242
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2012
935
10167
9.19642
2011
1724
9037
19.07713
Table:
Graphical Presentation:
Net Income
Total Equity
Ratio
2014
602
898
0.670379
2013
687
806
0.852357
2012
935
707
1.322489
2011
1724
639
2.697966
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Interpretation:
2014
2013
2012
2011
48%
48%
30%
25.50%
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Interpretation:
EPS is one of the widely used method to measure its profitability. In 2013 and 2014 company
declared 48% of its profit per share .In 2011 it was 25.5%.
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Findings:
After the collecting and analyzing of data I have got some findings. These findings are
completely from our personal point of view. Those are given below.
Company is in very good position because of its asset strength and life fund.
There is most strength point is no loan from any institution.
As an insurance company, I have talked personally that they seem to believable
institution. There is no fraud.
Life fund is as stable as IDRAs rule.
It has skilled employee to serve the policy holder.
Recommendations:
Though the market is so much competitive, but the performance of the team of Sandhani Life
Insurance Company Ltd. is really satisfactory. Their offerings, services, post purchase behavior
with their valuable clients, regular notifications sent to the customers, organized way of making
policies, available agencies or branches, available customer care services through the whole
world etc. are helping them to capture the maximum amount of customers in this field. Some
recommendations for the organization areEvery employee are unhappy about their salary, it should increase.
Company should increase customer awareness about insurance sector.
Computerized system and latest communication devices are the most important elements
for the coming year for Sandhani Life Insurance Company Ltd.
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Conclusion
Sandhani Life insurance Company is one of the leading insurance Company in Bangladesh. The
performance of Sandhani life Insurance company is getting better day by day. Its premium,
assets, claims meeting, utilization of income is getting better in last three years. The study is
about the financial of Sandhani Life Insurance Company Ltd., its cash payments, claims meeting,
premium collection, service offered, products etc. The study also has showed that the factors are
related with the investors, customers and cost furthermore, the study has identified that the
Sandhanis customer (both Clients and beneficiaries) are influenced by most of the same factors.
Here Sandhani life insurance Company limited could improve its marketing strategy for customer
satisfaction. Overall we can see that Sandhani Life Insurance Company Ltd. is one of the
progressive Insurance Company in Bangladesh for its servicing and its better performance.
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Reference
1. Sandhani life insurance companys policy paper
2. www.sandhanilife.com/
3. Annual Reports
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