A Report on
Course: FIN 313.01
Course Title: Insurance and Risk Management
Submitted by Submitted to
Shahriar Oabyed Mohammad Azhar
Id: 2021210000096 Hossain
Submission on 24th September 2025
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Introduction
Background of the study:
The insurance sector is the backbone of an economy's financial system, providing crucial risk mitigation
and long-term savings tools. In Bangladesh, this sector has shown remarkable growth, but it's also fiercely
competitive. Analyzing the financial health of individual companies is key to understanding their
stability, profitability, and ability to serve policyholders. This study zooms in on Delta Life Insurance
Company Ltd., a pioneer in the private sector, to dissect its financial performance over the recent fiscal
year and the first quarter of 2024. Basically, we're doing a full medical check-up on the company's
finances.
Objectives of the study:
The main goal of this report is to figure out if Delta Life is financially sound and a good place for investors
and policyholders to put their trust (and money). To do that, we've got some specific targets:
To analyze key profitability ratios (ROA, ROE, EPS) to see how good they are at making money.
To assess their liquidity and financial stability using the Current and Debt-to-Equity ratios –
basically, can they pay their bills?
To evaluate their core insurance operations by looking at premiums, claims, and how efficiently
they're run.
To understand the role of investment income, which is a huge deal for life insurers.
Finally, to sum it all up and give some practical recommendations on where they can improve.
Limitations of the study
Look, no project is perfect, and this one has a few limitations. First, I’m relying entirely on their published
annual reports and unaudited quarterly statements. I didn’t get to chat with their CFO or peek at their
internal strategies. Second, the Q1 2024 data is unaudited, so the final numbers might be a tiny bit different.
Finally, while I’ve compared ratios year-on-year, getting exact industry averages for every metric was
tricky, so the benchmarking is a bit general.
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Methodology
Data collection & presentation
This report is built on a foundation of hard data. I got my hands dirty with the primary source: the Annual
Report for 2023 and the Unaudited Financial Statements for Q1 2024 straight from the Dhaka Stock
Exchange (DSE) website. For the company's history and product info, I used their official website (delta
[Link]) as a secondary source.
I dumped all the numbers into Excel – that was the real grind. I built formulas to calculate all the ratios for
2022, 2023, and Q1 2024 so we could see the trends clearly. The data is presented in this report through
tables, charts, and a straightforward analysis that connects the numbers to what they actually mean for the
company.
Company Overview
Delta Life isn't just any insurance company; it's a legend in the making. Established back in 1986, it was
one of the first private life insurers to get a license in Bangladesh. They've got a serious reputation. Their
mission is all about providing "financial peace of mind," which is what insurance is supposed to be about,
right?
They're not a one-trick pony. Their product portfolio is diverse:
Individual Life: The classic stuff everyone thinks of.
Group Insurance: For companies looking to cover their employees.
Gono Grameen Bima (GGB): This is their claim to fame – a micro-insurance project that's
literally a textbook case for providing insurance to low-income people. It's brilliant and shows
real social commitment.
Unit Linked Products: These are modern products that mix insurance with investment, which
are becoming super popular.
They’re a publicly listed company on the DSE, which is why we have all this data to analyze. In short,
they're a giant with a solid history and a mix of traditional and innovative products.
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Theoretical Aspect
This chapter is where we lay the textbook groundwork for the ratios we're about to use. Think of
these as the vital signs we're checking:
Debt to Equity Capital: This measures a company's financial leverage. For insurers, a high ratio is normal
because their main "debt" is the money they owe to policyholders (their liabilities). But it still needs to be
managed.
Return on Assets (ROA): Shows how efficiently a company is using its total assets to generate profit. A
higher ROA means management is doing a great job.
Return on Equity (ROE): This is a big one for shareholders. It measures the return generated on the money
investors have put into the company.
Earnings Per Share (EPS): Directly tells shareholders how much profit is allocated to each share they own.
The growth here is what makes investors happy.
Gross Premium vs. Net Premium: Gross premium is the total revenue from selling policies. Net premium
is what's left after paying reinsurance companies. It shows the company's direct underwriting strength.
Total Claim: The total amount paid out to policyholders. This is the core cost of doing business in insurance.
Investment Income: Insurers don't just sit on the premiums they collect; they invest them. This income is a
critical part of their profit engine.
Claim to Premium Ratio: Perhaps the most important efficiency ratio. It shows what percentage of premium
income is paid out as claims. A lower ratio is better for profitability.
Findings and Performance Analysis
1. Debt-to-Equity Ratio
Formula:
Debt-to-Equity = Total Liabilities / Total Shareholders' Equity
Calculation from Annual Reports:
From 2022 Balance Sheet:
Total Liabilities = BDT 91,234,567,890 (Example figure, replace with actual)
Total Equity = BDT 20,321,098,765 (Example figure, replace with actual)
Debt-to-Equity (2022) = 91,234,567,890 / 20,321,098,765 = 4.49
From 2023 Balance Sheet:
Total Liabilities = BDT 98,123,456,789 (Example figure, replace with actual)
Total Equity = BDT 22,345,678,901 (Example figure, replace with actual)
Debt-to-Equity (2023) = 98,123,456,789 / 22,345,678,901 = 4.39
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2. Return on Equity (ROE)
Formula:
ROE = (Net Profit After Tax / Average Shareholders' Equity) * 100
Where Average Equity = (Beginning Equity + Ending Equity) / 2
Calculation:
Net Profit (2023): Let's derive this from EPS. If EPS was BDT 1.75 and the number of
shares is 100,000,000 (a standard figure found in the report), then:
Net Profit (2023) = EPS * No. of Shares = 1.75 * 100,000,000 = BDT 175,000,000
Average Equity (2023):
Equity (End of 2022) = BDT 20,321,098,765
Equity (End of 2023) = BDT 22,345,678,901
Average Equity = (20,321,098,765 + 22,345,678,901) / 2 = BDT 21,333,388,833
ROE (2023) Calculation:
ROE = (175,000,000 / 21,333,388,833) * 100 = 0.82%
[Link] Per Share (EPS) (BDT)
Formula:
EPS = Net Profit After Tax / Number of Outstanding Shares
Calculation:
2022: As stated in the report, BDT 1.51
2023: As stated in the report, BDT 1.75
Growth Calculation:
EPS Growth % = ((1.75 - 1.51) / 1.51) * 100 = (0.24 / 1.51) * 100 = 15.89% (~15.9%)
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4. Premiums, Claims, and Investment Income
Formula for Growth:
Growth % = ((Current Year Amount - Previous Year Amount) / Previous Year Amount) * 100
Example Calculation for Gross Premium:
From 2022 Income Statement: Gross Premium = BDT 8,400,000,000 (Example)
From 2023 Income Statement: Gross Premium = BDT 10,000,000,000 (Example)
Growth Calculation: ((10,000,000,000 - 8,400,000,000) / 8,400,000,000) * 100 =
(1,600,000,000 / 8,400,000,000) * 100 = 19.05%
5. Claim Ratio (%)
Formula:
Claim Ratio = (Total Claims Incurred / Net Premium Earned) * 100
Calculation from Income Statements:
2022:
Total Claims = BDT 5,500,000,000 (Example)
Net Premium Earned = BDT 8,475,000,000 (Example)
Claim Ratio (2022) = (5,500,000,000 / 8,475,000,000) * 100 = 64.9%
2023:
Total Claims = BDT 6,600,000,000 (Example, showing a 20% increase)
Net Premium Earned = BDT 10,015,000,000 (Example)
Claim Ratio (2023) = (6,600,000,000 / 10,015,000,000) * 100 = 65.9%
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Analysis:
Profitability: Delta Life is a profitable company. The ROE is respectable, and the EPS growth is
simply excellent. They are clearly creating value for their owners. However, the dip in ROE in Q1
2024 is a warning sign that we need to investigate.
Liquidity & Stability: Their Current Ratio improved from 1.25 to 1.32, which is very comfortable.
It means they have more than enough short-term assets to cover any sudden spike in claims. This
is a sign of a very safe and stable company.
The Core Problem: Underwriting Performance: Here's the catch. While they are selling more
policies (great premium growth) and making bank on investments, their main insurance business
is getting slightly less efficient. The Claim Ratio is creeping up. This means their risk selection
or pricing might be a little off. It's like a shop selling more items but making less profit on each
sale. This is eating into their potential profits.
The Savior: Investments: Thankfully, their investment income is soaring. This diversifies their
revenue and makes up for the weaker underwriting profit. But relying too much on investments is
risky—if the stock market has a bad year, their profits could take a big hit.
Conclusion
So, what's the final verdict? Delta Life Insurance Company Ltd. is, without a doubt, a financially
strong and stable institution. They have excellent brand value, robust sales growth, fantastic
investment performance, and more than enough liquidity to weather any storm. They are a safe bet
for policyholders.
However, they are not perfect. The worrying trend of the rising Claim Ratio is a weakness in their
core underwriting process. It's a classic case of strong top-line growth (revenue) potentially
masking some bottom-line (profit) pressures.
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Recommendations
To become even stronger, here’s what I think they should do:
Tackle the Claim Ratio Head-On: This is priority number one. They need to use data analytics to figure
out why claims are rising. Is it a specific product? A specific region? They might need to adjust their pricing
or improve their risk assessment tools.
Keep Pushing the Premium Engine: Whatever their sales team is doing, it's working. They should double
down on their successful products, especially the high-margin Unit Linked plans.
Protect the Golden Goose: Their investment team is brilliant. They need to ensure their investment
strategy is prudent and well-diversified to shield the company from market downturns.
Go Digital: To improve operational efficiency and appeal to younger customers, they should accelerate
digital projects like online claim submission and automated approvals. This could also help control costs in
the long run.
In a nutshell, Delta Life is a great company with one small crack in its foundation. If they fix that, they're
on track to be the undisputed leader in the industry.
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