BGIC earnings up 20% amid pandemic

Company financials

• Company's net profit was Tk5.83 crore during Jan-Sep 2020
• Earnings per share was Tk1.20
• Gross premium was Tk51 crore
• BGIC provided 15% commission to insurance agents during pandemic
• It recommended 11% cash dividend for investors last year

Amid the Covid-19 pandemic, earnings per share (EPS) of Bangladesh General Insurance Company (BGIC) Ltd increased by 20% in the first nine months of this year.

This was the result of the company giving commission to its insurance agents as per regulatory requirements.

Its EPS was Tk1.20, up from Tk1 in the same period of the previous year.

Also, the company's net profit was Tk5.83 crore, which was Tk5.76 crore in the same period of the previous year.

The principal activities of the company are to offer general insurance products including fire insurance, marine insurance (hull and cargo), motor insurance and miscellaneous insurance. Revenue under these activities is derived primarily from insurance premium.

During January to September this year, the company's gross premium was Tk51 crore, which was Tk56 crore in the same period of the previous year.

Its net premium was Tk30.28 crore, which was Tk38.83 crore in the same period of the previous year.

From January to September 2020, net claims of the company fell by 60.39% to Tk3.01 from Tk7.60.

Its net asset value per share was Tk19.01 as of September 30, 2020.

Saifuddin Ahmed, general manager and company secretary of BGIC, told The Business Standard, "We could not do good business amid the pandemic. But we tried to follow the agent commission rule as per regulatory requirements."

"As per law, we provided 15% commission to our insurance agents. For this reason, our income increased," he said.

Saifuddin went on, "Earlier, non-life insurance companies could give 50-65% commission to their agents illegally. As a result, their business could increase, but net income could not."

In March this year, the Insurance Development and Regulatory Authority (Idra) directed the non-life insurance companies to stop giving illegal commission to their agents.

It is alleged that companies provide 50-65% commission to their agents to increase business, but do not make reinsurance of policy holders. As a result, they cannot meet claims of insurers.

Bangladesh General Insurance Company was listed on the Dhaka Stock Exchange in 1989 and Chittagong Stock Exchange in 1996.

Its board of directors recommended an 11% cash dividend for investors for the year that ended on December 31, 2019. At that time, Its EPS was Tk1.08 and net asset value per share was Tk18.65.

Sponsor and directors jointly hold 34.82% of shares of the company, while institutions and general investors own 42.86% and 22.32% respectively.

The last trading price of the company's share at the Dhaka Stock Exchange was Tk42.10 per share on Sunday.