General insurance cos show mixed results for H1 but the sector overall registers lower profit

Persistent macroeconomic challenges, strong dollar, and runaway inflation continued to hit hard the businesses of general insurance companies, dragging down profits of most of them in the first half of this year compared to the previous year.
Twenty five of the 43 publicly-traded general insurance companies saw their profits plummet year-on-year while 17 others managed to post a moderate earnings growth. The one remaining did not experience any change in its business status in the January-June period.

Overall profit of the sector stood at Tk 3.12 billion in the six months through June, down from Tk 3.35 billion in the same period a year before, according to financial statements of the companies.
A majority of these companies had endured a drop in income in 2022 too, compared to 2021.
Company representatives blame the sluggish business on a combination of factors --- strong dollar, largely non-existent third-party insurance and lower earnings from the stock market investments.
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 the letters of credit (LCs) kept dwindling due to the dollar crisis stemming from the Russia-Ukraine war.
Business activities across the country had slowed down, so does the insurance business, said Sheikh Kabir Hossain, president of the Bangladesh Insurance Association.
The depletion of the foreign exchange reserves forced the government to tighten rules for imports.
LC opening dropped 26 per cent year-on-year in FY23, according to the Bangladesh Bank data. In fact, imports of anything not so necessary have been curtailed since March last year.
As a result, the marine insurance business fell substantially in the last six quarters.
Most general insurers have significant exposures to the stock market, another reason as to why their profits dipped. The market has been bearish for concerns over macroeconomic instability, unavailability of dollars, and raging inflation.
Half-yearly profit of Sonar Bangla Insurance, the organisation that Mr Hossain is the chairman of, dropped 31 per cent to Tk 46 million, compared to the same period last year.
Industry people say a big blow came from a sharp fall in automobile insurance as third-party insurance has become largely non-existent in the country.
Paramount Insurance's profit slumped 26 per cent year-on-year to Tk 45.54 million in January-June this year.
Its annual profit had also shrunk 38 per cent to Tk 76 million in 2022 compared to the year before.
Company secretary Zharna Parul said profit plunged as income from the marine business segment evaporated and for low returns from stock market investments.
"Almost all companies navigated a similar situation," she said.
The non-existent third-party insurance for vehicles also impacted business growth, Ms Parul said.
Third-party insurance is a policy purchased by the insured from the insurer for the protection against claims by a third party. But in Bangladesh, no one buys third-party insurance products since it is not mandatory in the latest 2018 Road Transport Act.
Green Delta Insurance, the second largest insurance company in terms of market cap, also experienced a 25 per cent fall in profit in the first half of this year although its premium income rose 9 per cent to Tk 2.34 billion during the time.
"The profit dropped due to higher claims accrued in this period compared to the same period a year ago," said the company in its earnings note.
Green Delta's net claims surged 91 per cent year-on-year to Tk 239 million in January-June this year.
Phoenix Insurance's profit fell 28 per cent year-on-year to Tk 40 million in the first six months through June.
Profit dropped mainly due to lower premium income from their marine insurance segment, compared to the previous year, said Md Rafiqur Rahman, company secretary of Phoenix Insurance.
Central Insurance witnessed a 16 per cent year-on-year drop in profit to Tk 55.79 million in H1 this year.
Company secretary Md Jafar Ali said profit had fallen due to a decrease in gross premium income and lower earnings from the maritime business segment.
On the other hand, Reliance Insurance, the largest insurance company in terms of market cap, posted Tk 379 million in profit, the highest among listed general insurance companies in the first half, registering more than 7 per cent growth.
Its gross premium also rose 14 per cent to Tk 2.24 billion in the January-June period.
Reliance Insurance had gained a 10 per cent annual profit growth in 2022, compared to 2021, backed by higher gross premium income.
Company secretary Mohammad Mamunur Rashid said Reliance insurance could maintain the profit growth by boosting underwriting business.
"The management of the company adopted an appropriate business strategy to increase the company's premium income as well as net profit," he said.
Meghna Insurance, which was listed on the stock exchanges in June last year, saw an astounding profit growth of more than 275 per cent in January-June this year.
Unlike its peers, Meghna Insurance had seen its revenue from the marine segment jump 47 per cent year-on-year in January-June to Tk 127 million, said company secretary Kazi Md. Miraj Hossain.
The company's income from interest on deposits surged 58 per cent to Tk 19.19 million during the period.
It also got tax benefit after listing, said Mr Hossain.
The general insurance sector overall posted a 9.20 per cent return in the first half of this year, with 6.30 per cent capital gains during the period, according to an analysis by Green Delta Dragon, an asset management company.
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