Ladies and gentlemen,
I am pleased to welcome you all to the 23rd Annual General Meeting (AGM) of Agrani Insurance Company Limited (AICL). Thank you for joining us today. I hope that you and your families are safe and well amidst the changing global economic conditions. The past year has been eventful, and I would like to express my gratitude to all stakeholders for their unwavering support and confidence in our company. On behalf of the board of directors, I am privileged to present the Annual Report of Agrani Insurance Company Limited for the year 2022. Bangladesh has achieved remarkable progress under the leadership of our Honorable Prime Minister. 2022 marked the 51st anniversary of our independence, a milestone cherished by every Bangladeshi. We have come a long way from being an “Economic Basket Case” to becoming one of the world’s fastest-growing economies. As an entrepreneur, I am proud and grateful to be part of this development journey.
ECONOMIC ENVIRONMENT OF THE COUNTRY
There is no doubt that the world has been going through a highly challenging period of disruption and experiences of disastrous proportions. The worst of the pandemic seemed to be behind us. We were hoping for some sense of normality – but then came the war in Ukraine with all its horrors, with fears, with people suffering and fleeing. This is not what we thought the future would hold which has also had a huge negative impact on the economy of Bangladesh. According to the final estimations of BBS, the GDP growth in FY 2020-2021 has slowed to 6.94 percent. Bangladesh’s economy is turning around. According to the provisional estimates of BBS, the GDP growth in FY 2021-22 stood at 7.25 percent. Despite the stagnation in the economy caused by the corona virus and Russia-Ukraine war, our food production and supply chains remained unaffected, leading to inflation at 7.70 percent in FY 2021-22, slightly higher than the target (6%). Both export and import in Bangladesh have showed a sign of recovery after a sharp decline in FY 2020-2021. In FY 2021-22, Bangladeshi expatriates remittance stood at US$ 21,031.68 million which was lower (15.12%) than the previous fiscal year. In Bangladesh, similar to the rest of the world, was struck by the political unrest between Russia and Ukraine, rising inflation, energy crisis, supply chain disruption and the pressing need to address climate change forced to reduce industrial activity and hampered business growth. At Agrani Insurance, our business strategy focuses on establishing a comprehensive financial services platform that meets international standards in insurance. This platform will allow us to expand our range of services and venture into other financial products. Building on our achievements in 2022, we are confident in setting ambitious targets for the future. Our goals include increasing earnings per share, improving return on equity, and maintaining a strong balance sheet with a secure solvency capitalization ratio. We recognize the importance of enhancing productivity and implementing necessary changes promptly, particularly in the areas of social and digital insurance.
PERFORMANCE OF THE COMPANY
The financial performance in 2022 presented a mixed outcome due to various factors in the traditional business environment. These factors included regulatory decisions such as the transformation of target-based employees into agents, fixed salary-based employees, as well as the impact of the pandemic and political unrest between Russia & Ukraine. Consequently, we experienced a decline in the number of high-performing business producers. It is crucial for the Insurance Regulatory & Development Authority (IDRA) to maintain regular monitoring in the field to ensure the proper implementation of regulations regarding excessive commissions and credit business by all non-life insurance companies. Despite these challenges, our Gross Premium income increased by 20% in 2022. However, our net profit showed a more moderate growth of 8% compared to the previous year.
Considering the outcomes of the current year and with a forward-looking perspective, the Board of Directors has proposed a cash dividend of 8% and a stock dividend of 7% for approval by the shareholders at the 23rd Annual General Meeting (AGM).
The Insurance Regulatory & Development Authority (IDRA) has been actively working towards instilling discipline in the non-life insurance sector by issuing several circulars on the matter.
However, due to unavoidable circumstances, the implementation of these activities has been delayed on a few occasions. Additionally, IDRA intends to establish a standardized salary structure in the non-life insurance sector and introduce the Unified Messaging Platform (UMP). We believe that these circulars will effectively safeguard the interests of non-life insurance companies. It is important for all stakeholders in the non-life insurance sector to support IDRA in order to achieve prompt and positive outcomes. Despite the challenges posed by the current circumstances, Agrani Insurance Company Limited (AICL) strictly adheres to the rules, regulations, and circulars set by IDRA. The company respects IDRA’s decisions and diligently follows any directives without hesitation.
STRONG CORPORATE GOVERNANCE AND EMPLOYEE FRIENDLY ENVIRONMENT
Maintaining effective corporate governance is essential for the proper functioning of the insurance sector and the overall economy. Insurance companies play a vital role in assuring assets and funds against unexpected losses, thereby supporting businesses and contributing to economic growth. The safety and stability of insurance companies are crucial for financial stability, and their business practices are integral to the overall economic well-being. Agrani Insurance Company Limited (AICL) recognizes this importance and has dedicated significant efforts to establish a strong corporate governance framework within the organization. AICL places utmost value on its employees, considering them as the most valuable asset for the company. The well-being of employees is a top priority, and the organization strives to provide a conducive and employee-friendly work environment. By ensuring employee satisfaction, AICL believes that positive outcomes can be achieved. The company has always emphasized professionalism and has relied on its highly qualified personnel, who have demonstrated dedicated service over the years and
contributed to the company’s growth and current position. To support the Chief Executive Officer, the management of AICL has appointed a select number of experts with extensive professional experience in the non-life insurance sector. These individuals bring valuable expertise to the company and assist in driving its success.
CORPORATE SOCIAL RESPONSIBILITY
Corporate Social Responsibility (CSR) entails a company’s responsibility towards the community and the environment, encompassing both social and ecological aspects. Engaging in CSR initiatives has been shown to have a positive impact on a firm’s performance, and the corporate sector worldwide has embraced CSR by supporting various programs focused on education, culture, environment, and health. Since its establishment, Agrani Insurance Limited has actively participated in CSR activities, and the recently concluded year 2022 was no exception. The company allocated a total of BDT 2.5 million towards CSR initiatives. It is encouraging to witness that CSR has become an integral part of the business strategy for corporations, and it is crucial to execute CSR activities with the aim of ensuring a sustainable environment for future generations.
We hold a positive outlook for the future, despite the global political unrest casting some uncertainty over the prospects of 2023. However, the country’s expected economic growth, supported by accommodative monetary policies and stable inflation, instills a sense of hope for the revival of the economy. Despite the challenging environment, we remain optimistic about expanding our business. To achieve our targets for 2023, we will continue to enhance our technology initiatives, service standards, and operational processes to meet our customers’ expectations and preferences. Looking ahead, we believe that long-term sustainable growth will depend on a few key factors. Firstly, there is an opportunity to bridge the protection gap, which is projected to grow in line with the country’s nominal GDP. Secondly, we can leverage the recovery environment and long-term positives present in the country to capitalize on multi-decade opportunities. Lastly, optimizing our product mix and improving business quality parameters, such as persistency and cost ratios, will be crucial. Throughout the year, the various initiatives we undertake will help reshape our organization from a long-term perspective. We will collaborate with our stakeholders to address new challenges they face, with a focus on closing the significant protection gap in the country. As we move into FY 2023, we will actively establish new structures, systems, and processes to facilitate our efforts in reshaping the business and ensuring a strong resurgence.
On behalf of the Board, I would like to express our sincere gratitude to our shareholders, customers, and business partners for their unwavering support, trust, and patronage. We are grateful for the valuable contributions made by our Auditors, Legal Advisors, Consultants, and Correspondents, who have played pivotal roles with timeliness and prudence. We extend our heartfelt appreciation to the management, executives, and officers for their dedicated services in advancing the interests of our esteemed institution. We would also like to extend our thanks to the Government of the People’s Republic of Bangladesh, officials of IDRA, BIA, officials of the Bangladesh Securities and Exchange Commission, the Financial Reporting Council, Dhaka Stock Exchange, Chittagong Stock Exchange, and the National Board of Revenue for their
cooperation and support. Furthermore, we acknowledge the unwavering support and agility demonstrated by our colleagues on the Board, who have consistently guided our institution in the right direction. Once again, we extend our gratitude to all the mentioned individuals and organizations for their invaluable contributions to our company’s success.
Quazi Sakhawat Hossain (Lintoo)