Both Central Insurance and Phoenix Insurance have reported a decline in profit in 2022, compared to the previous year, mainly due to a decrease in premium income from the marine segment.
A sharp fall in third-party insurance and lower earnings from the stock market investments also contributed to the deceleration of profit.
The stocks, however, were elevated marginally on Tuesday when most other securities were struggling to move up from floor prices.
Central Insurance witnessed a 16 per cent year-on-year drop in profit to Tk 108 million in 2022 while Phoenix Insurance's net profit fell 8.43 per cent to Tk 81.50 million in 2022.
In Bangladesh, the general insurance companies do business mainly in three segments -- fire, transport and marine.
The marine insurance business fell as the opening of letters of credit (LCs) plummeted in 2022 due to the dollar shortages.
Central Insurance
The non-life insurer has reported earnings per share of Tk 2.03 in 2022, down from Tk 2.41 the year before.
The board of the company has recommended 15 per cent cash dividend for 2022, reduced from 18 per cent cash dividends distributed to shareholders a year earlier.
Company secretary Md Jafar Ali said profit had slumped since gross premium income and earnings from the maritime business segment fell.
"The income from the third-party insurance segment for vehicles has fallen drastically after the removal of the insurance requirement," said Mr Ali.
Third-party insurance is a policy purchased by the insured from the insurer for protection against claims by a third party. For example, the owner of a vehicle pays a premium to an insurance company to cover the damage in a road accident involving the vehicle.
In Bangladesh, no one buys third-party insurance products since it is not mandatory under the Road Transport Act 2018 which is in effect.
The company is yet to disclose its 2022 gross premium. Its gross premium was Tk 467.42 million in 2021.
The company has also reported net asset value per share of Tk 49.48 and net operating cash flow per share of Tk 2.51 for 2022, as against Tk 49.35 and Tk 2.77 for 2021.
Central Insurance provides insurance coverage for fire, damage to marine cargoes, personal accident, overseas medical claims, motor vehicles etc.
It also underwrites non-life insurance business of all classes.
Central Insurance is trying to enhance underwriting capabilities so that the company can generate a significant premium income in the days to come, said the company secretary.
Phoenix Insurance
The insurer's earnings per share stood at Tk 2.02 in 2022, decreased from Tk 2.20 in 2021.
The board of Phoenix Insurance recommended 15 per cent cash dividend for 2022, the same as for 2021.
Net profit dropped as dividend income and other income went down in 2022 compared to the previous year, the company said in a regulatory filing on the Dhaka Stock Exchange's website on Tuesday.
Interest income from fixed deposit receipts and stock market investments plummeted due to the bearish market trend.
The consolidated net asset value per share fell to Tk 37.10 in 2022 from Tk 39.90 in 2021, owing to the fall in the prices of most of the stocks, in which the insurer had invested.
The company has a significant exposure to the stock market battered by macroeconomic instability caused by higher imports, dollar shortages, and runaway inflation.
The company's consolidated net operating cash flow per share also slumped to Tk 1.37 in 2022 from Tk 4.06 a year earlier because of lower premium deposits and other incomes, said the company.
Established in 1986, Phoenix Insurance provides insurance coverage for fire, damage to marine cargoes and motor vehicles, overseas medical claims and travel.
Stock performance
Despite the disclosure of lower profits for 2022, the stocks of Central Insurance and Phoenix Insurance rose on Tuesday from the previous day.
Central Insurance was up 1.64 per cent to close at Tk 37.10 a share.
The stock hovered between Tk 34.80 and Tk 41.60 in the last three months. Its share price dropped to Tk 34.80 on January 3 and went up steadily to Tk 41.60 on January 22 this year.
Phoenix Insurance climbed up 1.19 per cent to close at Tk 34 per share on Tuesday.
The general insurer traded at between Tk 33.20 and Tk 39.10 in the last three months.
While a majority of the stocks have remained stuck at floor prices for long for a lack of buyers, investors have had higher participation in share transactions of insurance companies.
There are 46 general insurers and 34 life insurers operating in Bangladesh, of them 56 are listed on the stock market.
The general insurance business in Bangladesh accounts for less than 1 per cent of the country's total gross domestic products as a large part of the economy still remains untapped.
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