Paramount Insurance 2020 profit shoots up 371%

Non-life insurance company Paramount Insurance saw a 371% increase in its profit in 2020 compared to the year before. 

According to the company's unaudited financial statement, it made a profit of Tk18.23 crore, up from Tk3.87 crore in 2019.

Moreover, its profit increased by 124% in 2019 compared to the previous year.

The 2020 profit was the highest in the history of the company. Its officials said profits had risen due to the increase in premium income, underwriting profit, and interest and investment earnings.

Zharna Parul, company secretary of Paramount Insurance, told The Business Standard some steps had been taken to expand business. "We hope earnings will increase more in the future."

Insurance Development and Regulatory Authority data show both life and non-life insurance companies' premium earnings decreased due to the Covid-19 pandemic. 

But Paramount Insurance says its premium income increased during the pandemic and it did not face any problem.

It lost Tk46 lakh in the first quarter (January-March) of 2020. But in the following six months from April to September, it made good profits, which continued until the end of the year.

The company has recommended a 20% stock dividend for shareholders. As it will construct a new building named Paramount Insurance Bhaban, it has decided to pay stock dividends rather than cash.

But its shareholders are disappointed over the decision to pay stock dividends.

As it will not pay any cash dividend, it has to pay 10% tax on stock dividend as per Sub-section 16(f) of the income tax ordinance, which was added last year.

Its earnings per share (EPS) was Tk5.38 in 2020, which was five times higher than that in 2019.

The company board has decided to distribute 37.17% of the EPS as stock dividends, which will be 5:1 per share. Moreover, the company will comply with the insurance act regarding the Tk40 crore paid-up capital requirement for non-life insurance.

At present, the company's paid-up capital is Tk33.88 crore. That is why it declared stock dividends. Bonus shares were not declared from capital reserve or revaluation reserve or anything else other than accumulated profit.

The annual general meeting of the company will be held online on 3 May and the record date has been set at 1 April.

The share price of Paramount Insurance decreased by 4.77% to Tk113.80 from Tk119.50 on Tuesday.

The company was listed on the stock exchanges in 2007.

Until January this year, of its 33,887,472 shares, sponsors and directors held 48.49%, institutional investors 9.50%, foreign investors 0.01%, and the general public 42%.