Despite the decline in their core business, listed non-life insurance companies posted higher profits in the July-September quarter of this year, thanks to a good return on their investments in capital markets.
Usually general insurers provide services to their clients in fire, marine, engineering, automotive and miscellaneous fields.
Industry insiders said marine insurance activity declined by around 10% in the third quarter, although the economy returned to near normal levels.
They said that currently maritime affairs, especially the shipment of equipment for megaprojects and machinery for factories in export processing zones, are being settled overseas, depriving local insurance companies of these companies.
But well-known insurers have made impressive profits in their core businesses, they added.
Insurers said companies have been able to make an impressive profit from increased returns on investment and lower operating costs.
Companies have moved their investments to the capital market instead of parking them in Fixed Deposit Receipts (FDRs).
Agrani Insurance Company Limited’s core business fell 26%, although net profit jumped 265% in the three months ending September 2021.
The company received a return of Tk 45 lakh from the capital market during the period.
Chinmoy Chakrabarty, COO of Agrani Insurance, said: “Our core business declined as marine insurance declined over the period. “
He said letters of credit (letters of credit) have fallen 5-10% in the Chinese market.
As a result, local insurers lost their business, he added.
During the July-September period, the Bangladesh National Insurance Company made a profit of Tk 2.54 crore from its main business, which is 37% lower than in the same period of 2020.
Although the company saw positive growth during the period, it also received a return of Tk 2.68 crore on its equity investments.
A company official, seeking anonymity, said profit from the main business had declined due to increased administrative costs.
“We are trying to maintain good business despite a slight decline in maritime activity,” he added.
United Insurance Company Ltd posted net profit of Tk 2.62 crore, down 45% from the same period of 2020.
A company official, wishing not to be named, said some well-known companies have been able to maintain good core businesses after the economy reopens.
Currently, there are 79 insurance companies – 33 life and 46 non-life – in the Bangladesh insurance industry. Among them, 52 companies are listed on the stock exchange.
Experts have long said that Bangladesh is one of the most untapped insurance markets in terms of penetration rate.
Awareness and a strong insurance service culture behind the business activities can help the industry to thrive.
According to the Swiss Re Group, one of the world’s leading reinsurers, shows that overall insurance penetration in Bangladesh stood at a meager 0.40% in 2020 – the lowest among emerging Asian countries.