IPO Note Bangladesh National Insurance

Company Limited
Date: , 2016

Ticker: BNICL

Key Comps
Post IPO
Post IPO EPS Pre- IPO EPS
EPS
Post-IPO
Offer Price
(Annualized
(Audited)
(Audited)
NAV
)
10
0.64
4.7
N/A
9.4
Audited
Number of Free Float NumCompnay vs
Income
Securities ber of Securities
Premium
Industry
(MN)
(MN)
Y-o-Y
BNICL
-11.20%
0
44.2
17.6
General
-0.10%
Insurance

Post IPO
Audited P/ Sponsor %
E
15.6x
Annualized
Vs Audited
Growth
N/A

60%
Current
Quarter
Y-o-Y
N/A

-9.10%

-18.70%

Public %

Year end

Latest Q
No.

40%

July

Audited

Annualized
P/E

P/B

N/A

1.06x

13.5x

1.7x

P/E
15.6x
12.3x

Bangladesh National Insurance Company Limited (BNICL) was

incorporated in Bangladesh as a public limited company on 21
May 1996 under the Companies Act, 1994 and licensed under the
Insurance Act, 1938 in order to run all types of general insurance
business other than life insurance business. Like most of the general insurance companies in the industry, BNICL underwrites risks
in fire, marine, motor and miscellaneous business areas.
The company presently has 26 strategic branches with one local
office. BNICL runs its operation through 338 fulltime employees.
Industry Facts
Bangladesh insurance market is still small with a combined life
and non-life insurance market premium of US $960 million. The
industry ranked 76th in the world with a 0.02% share in the global insurance industry. Per capita insurance spending is only US$
2.6. Insurance penetration (premium as a % of GDP) remains low
at 0.9% (0.7% for life insurance and 0.2% for non-life). The YoY
average growth of non-life insurance companies was 12%.
Presently there are 77 insurance companies, when there are two
state owned companies (Jiban Bima Corporation for life insurance, and Sadharan Bima Corporation for general insurance), 45
general insurance and 30 life insurance companies in the private
sector. 47 insurance companies are listed in the capital market of
which 12 are life insurance providers. Government has recently
issued license to Indias state owned-Life Insurance Corporation
(LIC), despite some reported reservation from the regulatory agency. Globally renowned life insurance operator-Prudential is also
likely to be given a license to operate in Bangladesh.

Leading Non Life Insurance Companies

Green Delta Insurance Co Ltd
Sadharan Bima Corporation
Pioneer Insurance Co Ltd
Reliance Insurance Limited
Pragati Insurance Ltd
Rupali Insurance Co Ltd
Eastland Insurance Co Ltd
Phoenix Insurance Co Ltd
Bangladesh Gen Ins Co Ltd
Continental Insurance Ltd

Gross Written Premiums

2,601.40
2,212.00
1,701.30
1,486.30
1,151.30
759.5
650.1
614.6
591.5
451.2

Source: international insurance factbook, 2015

IPO Note Bangladesh National

Insurance Company Limited

Investment Thesis

BNICL registered a revenue growth of 45% (CAGR) over the

past 5 year basis.

The companys asset structure comprises of 74% cash and bank

balances. While fixed deposit accounts consist of 90% of the total
cash & bank balance segment. In aggregate the investment segment captures 82% of the total asset pie while BNICL yielded
3.2% out of its investment in 2014.

The company generate its highest proportion of revenue from the

Marine insurance segment (60% of the total insurance premium
received) followed by fire insurance (20%) & motor insurance
(9%).

BNICL manifested a suggestive growth of 53% in motor insurance segment while 18% growth in marine insurance segment
over the past 6 years. In Bangladesh Marine Insurance is considered to be the life guard for the non life insurance business.

BNICL relies heavily on Bank deposits/Treasury securities yield.

Earnings from these sources reported a significant percentage
(36.50%) over the last year. The recent down move in yield rates,
both at government and private level might get momentum for
BNICL. Bangladesh bank has recently slashed its key rate by 50
basis point on its last declared monetary statement in a move to
lower countries lending rate to boost economic activities.

As per company provided data total 160 numbers of claim

lodged in the FY 2013 and 106 numbers lodged in FY 2014
within seven months period. Out of total 351 claims 82 settled in FY 2013 among them 55 of motor, 17 of fire, 6 of
Marine and 4 miscellaneous.
The company announced 15% cash dividend in the year of 2013,
while the total amount paid was BDT 9 mn. While it increased
its capital base by issuing 20,550,000 shares in 2014.

Valuation Argument
The company has an audited price earnings of 15.6x at the offer price
of BDT 10.0 versus general insurance industry price earnings of 12.3x.
With x price earnings, BNICL could be traded at BDT .

Key Financials
(mn BDT)

2010 2011 2012 2013 2014

Revenue
Gross Profit
EBITDA
Operating Profit
Net Income
Total Asset
Total Debt
Total Equity

7.9 15.5
11.5 26.4 34.9
3.4
9.6
5.0 21.7 30.1
18.1 16.7
24.7 43.0 52.9
14.7 11.3
19.6 39.3 48.5
11.6 10.1
15.0 28.2 28.3
295.9 304.2 348.8 437.9 700.7
35.9 40.3
49.3 120.8 111.9
135.7 145.8 160.8 185.4 415.6

Profitability
Gross Profit Margin
Operating earning
(% of Revenue)
ROE
Investment Yield
Asset Turnover

43.3% 62.0% 43.3% 82.3% 86.2%

143.8% 10.7% 127.2% 66.7% 52.8%
8.5%
6.0%
2.7%

7.2%
0.8%
5.2%

9.8% 16.3% 9.4%

6.1% 5.7% 3.2%
3.5% 6.7% 6.1%

N/M 97.5%
N/M 183.0%
N/M -23.2%
N/M -13.0%

-26.1% 129.9% 32.2%

-48.4% 336.6% 38.5%
73.2% 100.9% 23.3%
49.2% 87.7% 0.3%

Growth
Sales Growth
Gross Profit Growth
Operating Profit Growth
Net Profit Growth

Risk

2010 2011 2012 2013 2014

Debt to Capital
0.2

0.2

0.2

0.4

0.2

2.2

2.1

2.1

2.3

1.9

Financial Leverage

Performance
Metrics

2010 2011 2012 2013 2014

Expense Ratio
Gross Earned Premium
(BDT mn)
Re-Insurance / RI ceded
(BDT mn)
Current Asset/Outstanding
Claims

13.5% 3.3% 11.7% 3.9% 1.2%

118.2 129.2 142.4 313.0 227.8
45.6

45.2

57.6

70.3

37.9

3.4x

2.2x

2.0x

2.3x

3.7x

Ownership Structures
Name

Status

Abdul Baset

Chairman
Vice ChairMostafa Kamal man
Tanjima Binthe Director
Thamina Binthe Director
Tanveer Ahmed Director
Others
Total

Director &
share holders

Number of % Held % Held

securities (Pre-IPO) (Post-IPO)
885,000
3.3%
2%
2,424,833
3,208,334
3,308,334
4,175,167

9.1%
12.1%
12.5%
15.7%

5%
7%
7%
9%

12,548,332
26,550,000

47.3%
100%

28%
60%
2

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