Published :
Updated :
For all latest news, follow The Financial Express Google News channel.
Bangladesh General Insurance Company (BGIC) reported a 17 per cent drop in profit to Tk 68.6 million for 2023, due to higher claim settlements and lower earnings from the stock market.
In 2022, the country's first general insurer made a profit of Tk 82.6 million.
Subsequently, the earnings per share (EPS) of the company stood at Tk 1.27 in 2023, down from 1.53 in the year before, according to a stock exchange filing on Thursday.
A company official, declining to be named, attributed the fall in profit to sluggish business on the back of a strong dollar, largely non-existent third-party insurance, lower earnings from the stock market and higher claim settlements.
The company's board of directors has recommended a 10 per cent cash dividend for 2023, the lowest in five years. The insurer last paid out a 10 per cent cash dividend in 2018.
In Bangladesh, general insurance companies do business mainly in three segments -- fire, transport and marine.
The marine insurance business shrank to a large extent as the opening of letters of credit (LCs) kept dwindling due to the dollar crisis.
Exports did not increase as expected for the subdued demand in the destination countries while the government tightened rules for imports to protect the depleting foreign exchange reserves.
L/C opening plummeted around 20 per cent year on year in 2023, according to the Bangladesh Bank data. As a result, the overall marine insurance business fell substantially during the time.
The general insurer has also significant exposures to the stock market, another reason as to why its profits dipped. The stock market remained almost stagnated throughout 2023, owing to the imposition of floor price.
Third-party insurance is a policy purchased by the insured from the insurer for protection against claims by a third party. But in Bangladesh, no-one buys third-party insurance products since it is not legally binding.
However, Bangladesh General Insurance is yet to disclose the detailed annual financial statements for 2023.
Its net premium grew 5 per cent year on year to Tk 399 million in nine months through September last year while claim settlement surged by 58 per cent to Tk 63.37 million during the time.
The net operating cash flow per share, a measure of a company's ability to generate cash from its operations, dropped to Tk 0.37 per share in 2023, from Tk 1.85 in the year before.
The net asset value, which refers to the excess of total assets over total liabilities, stood at Tk 19.55 per share in 2023, up from Tk 19.17 in the previous year.
Listed in 1989, the first general insurer is providing all classes of insurance, including fire, marine and motor.
Its stock plunged 2.06 per cent to Tk 38 on Thursday.
The company's first quarter profit also fell 13 per cent year on year to Tk 34.6 million in January-March this year.