CLAIM SETTLEMENT & FINANCIAL STATEMENT

ANALYSIS OF THE NATIONAL INSURANCE CO. LTD

    

(2018-20)

    SUMMER INTERNSHIP PROJECT REPORT

Under the Guidance of  Submitted By

Dr. BHASKAR BANDYOPADHAY PRIYANKA SAHU

(Professor, Mentor) Roll no :201881040
Reg no: 1806202038

1
DECLARATION
2
I am Priyanka Sahu pursuing (MBA) in National Institute of Science and
Technology (NIST), Berhampur hereby declare that I have completed the project
entitled “CLAIM SETTLEMENT & FINANCISL STATEMENT ANALYSIS
OF NATIONAL INSURANCE CO. LTD” under the external guidance of Mr.
Pradip Sarkar and also internal guidance of Dr. Bhaskar Bandyopadhy (Professor,
Mentor).
I further declare that the information’s presented in my project are true to the best
of my knowledge.

Place: BERHAMPUR
Date: 11/01/2020 Priyanka Sahu

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 ACKNOWLEDGEMENT

I thank MR. PRADIP SARKAR who provided insight and expertise that greatly
assisted the project. His suggestions have really helped in the creation of this
project.
I am also thankful to my internal guide Dr. Bhaskar Bandyopadhy, Asst.
Professor, Mentor for guiding me and giving the suggestions for completing my
project.
I would also like to show our gratitude towards him for his assistance in providing
us the required data and his immense help in understanding the complexities of the
project. I also thank him for sharing his guidance and wisdom during the course of
this project.

Priyanka Sahu

Table of Contents

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Chapter Content Page No.
No.
1. Introduction
1.1 General Overview
1.2 Purpose of study 7-8
1.3 Scope of the report
1.4 Objective of the report

2. Company Profile 9-10

2.1 Corporate information
11-13
3. Methodology
3.1 Underwriting Department Operations
3.2 Marine Hull Insurance Claims
3.3 Motor Own Damage Insurance Claims
3.4 Health Insurance Claims
3.5 Miscellaneous Insurance Claims
3.6 Reinsurance Department Operations
3.7 Claim Department Operations

14-29

4. Data Analysis and Interpretation

5. Conclusion 30

6. Bibliography 31

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 S.No List of Tables Pg. no
3.1 Underwriting performance 13
4.1 Comprative Balance sheet of NICL 15-16
4.2 Profit & Loss a/c of NICL 17-18
4.3 Premium received by the NICL 18
4.4 Trend Analysis 20
4.5 Current Analysis 22
4.6 Cash Ratio 24
4.7 Net working capital Ratio 24
4.8 Proprietary Ratio 26
4.9 Return on Equity 27
4.10 Earning per share 28
4.11 Net profit margin 29

S.No List of Graphs Pg. no

3.1 Premium distribution 13
4.1 Net Asset of NICL 16

4.2 Premium received of NICL 19

4.3 Profit & loss of the NICL 19
4.4 Asset under management 20
4.5 Premium received 20

4.6 Operating Expenses Ratio 21

4.7 Net profit of the NICL 21
4.8 Current Ratio 23
4.9 Cash Ratio 24
4.10 Net working capital Ratio 25
4.11 Proprietary Ratio 26
4.12 Return on Equity 27
4.13 Earning per share 28
4.14 Net profit margin 29

CHAPTER 1

6
 INTRODUCTION

1.1 GENERAL OVERVIEW:

This report has been prepared as the course requirement of the MBA program of National
institute of science & technology under the BPUT university. My Internship course is supervised
by Dr. Ratnakar Mishra, HOD. This report based upon the overall operation of the regional
office of National Insurance Company Limited (NICL)
Insurance is a means of protection from financial loss. It is a form of risk management, primarily
used to hedge against the risk of a contingent or uncertain loss.
An entity which provides insurance is known as an insurer, insurance company, insurance carrier
or underwriter. A person or entity who buys insurance is known as an insured or as a
policyholder. The insurance transaction involves the insured assuming a guaranteed and known
relatively small loss in the form of payment to the insurer in exchange for the insurer's promise
to compensate the insured in the event of a covered loss. The loss may or may not be financial,
but it must be reducible to financial terms, and usually involves something in which the insured
has an interest established by ownership, possession, or pre-existing relationship.
The insured receives a contract, called the insurance policy, which details the conditions and
circumstances under which the insurer will compensate the insured. The amount of money
charged by the insurer to the Policyholder for the coverage set forth in the insurance policy is
called the premium. If the insured experiences a loss which is potentially covered by the
insurance policy, the insured submits a claim to the insurer for processing by a claims adjuster.
The insurer may hedge its own risk by taking out reinsurance, whereby another insurance
company agrees to carry some of the risk, especially if the primary insurer deems the risk too
large for it to carry.
National Insurance Company Limited (NICL) is a state-owned general insurance company
in India. Its catch line is "Trusted Since 1906" in italic. The company headquartered
at Kolkata was established in 1906 and nationalized in 1972. Its portfolio consists of a multitude
of general insurance policies, offered to a wide arena of clients encompassing different sectors of
the economy Apart from being a leading insurance provider in India, NICL also serves Nepal.
After nationalisation in 1972, NICL operated as a subsidiary of General Insurance Corporation of
India (GIC). National Insurance Company Limited was spun off as a distinct company under
the General Insurance Business (Nationalization) Amendment Act in 2002. In April 2004, NIC
signed an agreement with Nainital bank for distribution of its general insurance products through
the bank's branches in Uttarakhand, Haryana and New Delhi.

1.2 Purpose of study:

This report has been prepared on the basis of experience gathered during the period of internship
for preparing this report I have also get information from annual report and website of the
National Insurance Company Limited I have presented my experience and findings by using
different chart and tables which are presented in the analysis part the details of the work plan are
furnished below :

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 Data Collection method: Relevant data for this report has been collected primary by direct
investigation of different records, papers, documents and operational process and different the
interviews administered by formal an informal discussion no structured questionnaire has been
used information regarding office activities of the insurance has been collected through
Consulting records and discussion
Data sources: the information and data for this report has been collected from both the primary
and secondary sources:-
The primary sources are as follows:-
 Face to face conversation with the respective officer and staff of the regional office
 Face to face conversation with clients who visited the regional office
 Practical work experience in the different desk of the department of the regional office
covered
 Relevant field study as provided by the officer concern
The secondary sources are as follows:-
 Annual report 2018 of National Insurance Company Limited
 Website of the company
 Different manual published by the NICL
 Different circular sent by the regional office

1.3 Scope of the report

This report has been prepared through extensive discussion with insurance employees and with
the clients while preparing this report I had a great opportunity to have and depth knowledge of
all the insurance activities of a of a leading private insurance in in Bhubaneswar.

1.4 Objective of the report-

The main objective are to know the overall operations of nationalism science Company Limited
there are some additional objectives of these reports are given below:-
 To get over an idea about the National Insurance Company limited
 To know and overall idea about insurance industry in Bhubaneswar
 To get proper information about the organization.

CHAPTER 2

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 Company profile
National Insurance Company Limited is India’s Oldest General Insurance Company. It was
incorporated in Kolkata, West Bengal on December 5, 1906 to fulfil the nationalist aspiration for
Swaraj. 66 years later, after passing of General Insurance Business Nationalisation Act in 1972,
it was merged along with 21 foreign and 11 Indian companies to form National insurance
Company Limited, one of the four subsidiaries of the General Insurance Corporation of India,
fully owned by Govt. of India. Under the provisions of this Act, the shares of existing Indian
general insurance companies and undertaking of other insurers were transferred to GIC for the
regulation and control of insurance business. On Aug 7, 2002, National insurance was delinked
from its holding Company that is GIC and was formed as an independent insurance company.
National Insurance has offices all over India and a foreign office in Nepal. The Company has
strong presence with around 1730 offices and more than 13000 skilled employees and over
50000 Agents spread all over the nation.

2.1 Corporate information

Board of directors:
 Chairman-cum-managing Director – Ms Tajinder Mukherjee
 General manager and director- Shri John Pulinthanam
 General manager and director- Shri Sidharth Pradhan
 Government nominee director- Shri Suchindra Misra
 Joint director department of financial services Ministry of Finance government nominee
director- Ms. Bhumika Verma
 Non-official director-Shri Sivaraman Mahadevan
 Non-official director- Shri Sudhakar Pahi
 Chief Vigilance officer & General Manager- Smt. Ranjana Bose.

Key persons:

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 Name Designation Key Post

Smt.Tajinder Chairman-cum-Managing
Chief Executive Officer
Mukherjee Director

Chief information Security

Smt Sophia Singh General Manager
Officer

Shri. P. Vijaya Kumar General Manager Chief Finance Officer

Smt. Sunita Tuli

General Manager Chief Investment Officer
Nagpal

Shri J. Sengupta Deputy General Manager Chief Risk Officer

Shri Debabrata Kar Chief Manager Chief Compliance Officer

Mission:
To be the most preferred choice of customers for General Insurance by building Relationships
and grow profitably.

Vision:
 Leveraging technology to integrate people and processes.
 To excel in service and performance.
 To uphold the highest ethical standards in conducting our business.

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 CHAPTER 3
METHODOLOGY
3.1 DATA GATHERING IN INSURANCE MANAGEMENT

First, the report must be set up for gathering data. This entails making sure that all projects use
the same language and can provide access to the same information about the project. In addition,
the manager should be ready by being able to state what they need in the way of data from the
projects and the proposed projects that are in the report.

3.2 DATA GATHERING IN INSURANCE RESEARCH

There are two main types of collecting information when you are researching various sectors or
industries.

They are secondary research and primary research.

Secondary Research, which is secondary nature i.e., already, collected information this
secondary data is collected through Company’s Annual Report and discussion with them.

Interpretation of:

 Balance sheet
 Profit & loss accounts
 Annual Report

Primary Research, which is the type of research method where you go out and collect the
data yourself.
The first task of the underwriter is to assess the risk which person brings to the common pool.
There are various definitions of risk and number of different associated terms. One of the terms
we examined was hazard. We differentiated hazard from peril by saying that peril was the event
giving rise to the loss itself, such as collision, fire, theft. Hazard was the factor which might after
the frequency or severity of the peril. Underwriter has the task of assessing the hazard which is
associated with the various perils brought to the common pool. There are two aspects of hazard,
physical and moral with which the underwriter is concerned.
THE UNDERWRITING PROCESS

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The actual process by which risks are underwritten will vary from one class of business to
another and will also depend on an insurer’s general approach. Underwriting in a general sense
in relation to personal insurances, life assurance and commercial insurances.
PERSONAL INSURANCE
The underwriting of personal insurances is relatively straightforward. The main source of
information about a risk will come from the proposal form and if there is anything else which an
individual underwriter may want, he would write to the proposer. A large volume of proposal
forms for various classes of personal insurance will be dealt with by branch offices of insures.
COMMERCIAL INSURANCE
The underwriting of commercial business insurances is a much more complicated and involved
task. Commercial insurance rang reform small shops and factories to large multinational
corporations with operations in many countries throughout the world. The essence of the task is
that the underwriter has to evaluate the hazard associated with the risk which is being proposed.
A RISK SURVEYS
Even where a broker is involved (and certainly when there is no broker). The underwriter will
involve a surveyor. This risk surveyor is the person who acts as Theeyes and earsof the
underwriter, many companies employ specialist’s surveyors in the different areas of risk such as
fire, security, liability, business interruption and so on. The surveyor will eventually prepare a
report for the underwriter. A full description of the risk.This may include the plan of the
premises in the case of property risk, the process being carried on at the premises, details of the
insured etc.
PREMIUMS
Tasks of the underwriter as: Assess a risk which people bring to the pool; Decide whether or not
to accept the risk or how much to accept; Determine the terms; conditions and scope of calculate
a suitable premium. So far we have looked at the role of the underwriter, the underwriter process
itself and the part played by reinsurance Insurance Companies have two final aspects the
insurance transaction to examine. The first, which business of pricing and praying for the
insurance service and the second is the making of claims. The last task of the underwriter was to
calculate a suitable premium. The premium which an insured pays represents that insured’s
contribution to the common pool. This contribution must be fair and must reflect the degree of
hazard which that insured brings to the pool. In other words, the premium must be sufficient to:

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UNDERWRITING PERFORMANCE OF THE NICL:
Rs in Crore
Table: 3.1 underwriting performance.
2017-18 2017-16
Fire
Gross premium 901.79 912.26
Net premium 75.29 83.92
Net claims 128.03 51.92
Underwriting profit 67.57 9.16
Marine
Gross premium 207.85 235.63
Net premium 69.88 65.62
Net claims 48.39 67.76
Underwriting profit 31.39 7.92
Miscellaneous
Gross premium 15083.90 13089.65
Net premium 70.28 73.36
Net claims 114.35 101.28
Underwriting profit 49.64 34.54
PREMIUM DISTRIBUTION as at 31.03.2018:

Premium
Other Misc.; 3% Fire; 6%
RNTB & Crop; 6% Marine; 2%
Fire
Marine
Motor OD
Motor TP
Engineering
Motor OD; 17% Liability
Health ; 33% Personal Accident
Health
Motor TP; 26% RNTB & Crop
Other Misc.

Personal Ac- Liability; 2%

cident; 2% Engineering; 2%

Graph: 3.1 premium distribution

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 CHAPTER 4
DATA ANALYSIS AND INTERPRETATION

4.1 Introduction to Financial Statement Analysis:

The analysis of financial statement consists of study of relationship and trends to determine
whether or not the financial position and result of operation as well as the financial progress of
the company are satisfactory or unsatisfactory. The analytical methods or devices, listed below
are used ascertain or measure the relationship among the financial statement items of a single set
of statement items of a single setoff statements and the changes that have taken place in these
items as reflected in successive financial statement. The fundamental objective of any analytical
methods is to simplify or to reduce the data under to more understandable terms.

Analytical methods and devices used in financial statements are as follows:

i. Comparative Statement
ii. Trend Ratio
iii. Ratio Analysis

4.2 Comparative Statement

These financial statements are so designed as to provide time perspective to the various elements
of financial position contained therein. These statements give data for all the periods stated so as
shows:

a) Absolute money values of each the period stated.

b) Increased and decreased in absolute data in terms of money values.
c) Increased and decreased in terms of percentage.
d) Comparison expressed in ratios
e) Percentages of total.

The Comparative financial statement analysis is statements of the financial position at different
period of time. The elements of financial position are shown in a comparative form will be
covered in comparative statement from practical points of view generally two financial
statements

Balance sheet
Income statements

4.2.1 Comparative Balance Sheet -The comparative balance sheet analysis is the study of
the trend of the same items, group of items and computed items in two or more balance sheets of
the same business enterprise on different dates.’ The changes in periodic balance sheet items
reflect the conduct of a business. The changes can be observed by comparison of the balance

14
sheet at the beginning and at the end of a period and these changes can help in forming an
opinion about the progress of an enterprise. The comparative balance sheet has two columns for
the data of original balance sheets. A third column is used to show increases in figures. The
fourth column may be added for giving percentages of increases or decreases.

Comparative Balance Sheet of NATIONAL INSURANCE CO. LTD

(for the year ending on 31st march, 2017 and 31st march 2018)

Particulars 31.03.2017 31.03.2018 Increased/ %

Decreased

Sources of Funds

Share Capital 1,000,000 1,000,000 0 0

Reserves & surplus 39,322,413 17,616,082 +136,838,389 3

Credits/ (Debit) Fair value change 11,816,638 7,826,815 -3,989,823 -33

account

Sub-Total(A) 52,139,051 26,442,897 -25696154 -49

Policy Holders Funds 198,853,777 201,925,776 +3071999 1

Credits/ (Debit) Fair value change 45,831,941 30,697,681 -15134260 -33

account

Policy liability 8,950,000 8,950,000 0 0

Sub Total (B) 253,635,718 241,573,457 -12062261 -4

Application of Fund

Total C= (A+B) 305,774,769 268,016,354 -37758415 -12

Investments

Shareholders 51,269,554 51,495,586 +226032 4

Policyholders 198,853,777 201,952,776 +3098999 1

Fixed assets 1,870,849 1,905,773 +34924 18

Sub-Total (D) 251,994,180 255,354,135 +3359955 1

15
 Current Assets

Cash & bank balances 10,886,866 9,306,508 -1580358 -14

Advances & other assets 56,735,064 80,038,916 +23303852 41

Sub-Total (E) 67,621,930 89,345,424 +21723494 32

Current liabilities 161,794,685 224,488,120 +62693435 38

Provisions 55,257,878 57,249,298 -1991420 -3

Sub-Total (F) 217,052,563 281,735,418 -64682855 -2

Net Current Assets/liabilities (G)= -149,430,633 -192,389,994 42959361 2.87

(E)-(F)

Debit balances in Profit & loss 1,522,026 _ 1,522,026 _

account (Shareholders` account)

Sub-Total (H) -147,908,607 -192,389,994 44481387 30.07

TOTAL 106,920,992 66,090,578 40830414 38.18

Table no. 4.1(Comparative Balance Sheet of NICL)

Interpretation of the above balance sheet reveals

I. Working Capital is increased from 14,943to 19,238 which is a positive signal for the firm
because increase in Working Capital leads to a better financial position and company
have more funds to do business activities.

Net Current Assests/ W.Capital

25000
20000
15000
10000
5000
0

2017 2018

16
Graph No- 4.1 Net Asset of NICL

II. There has been a drastic fall in cash balance (1580358). This reflects an adverse cash
position.
III. Fixed Assets has been increased by 34924 and even the Share Capital has been remains
same.
IV. Current Assets have been increased 21723494 this shows that company used the funds of
share capital to invest in current assets & want to make its liquidity situation better.

4.2.2 Comparative Income Statement-The comparative balance sheet has two columns
for the data of original balance sheets. A third column is used to show increases in figures. The
fourth column may be added for giving percentages of increases or decreases. Like comparative
balance sheet, income statement also has four columns. First two columns give figures of various
items for two years. Third and fourth columns are used to show increase or decrease in figures in
absolute amounts and percentages respectively.

Profit and Loss Account of NATIONAL INSURANCE CO. LTD

(for the year ending on 31st march, 2017 and 31st march 2018)

Particulars 31.03.2017 31.03.2018 Increased/ %

Decreased

INCOME FROM INVESTMENTS

Interest, Dividend & Rent - Gross -3,627,791 -28,319,262 0 _

Profit on sale of investments 17,616,082 +136,838,389 _

Less: Loss on sale of Investments 11,816,638 7,826,815 -3,989,823 33.76

OTHER INCOME 52,139,051 26,442,897 -25696154 49.28

Profit on sale of other asset 198,853,777 201,925,776 +3071999 1.54

Miscellaneous Income 45,831,941 30,697,681 -15134260 -33.02

Exchange Gain 8,950,000 8,950,000 0 _

Others 253,635,718 241,573,457 -12062261 -4.75

Total (A) /Net profit 305,774,769 268,016,354 -37758415 -12.34

PROVISIONS (Other than

taxation)
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 OTHER EXPENSES 51,269,554 51,495,586 +226032 0.44

Expenses other than those related to 198,853,777 201,952,776 +3098999 1.55

“Insurance Business"

Bad debts written off 1,870,849 1,905,773 +34924 1.86

Others: 251,994,180 255,354,135 +3359955 1.33

Other Expenses

Total (B) / Net expenses 10,886,866 9,306,508 -1580358 -1.38

Profit /(loss) before tax =(A)-(B) 56,735,064 80,038,916 +23303852 41.07

Provision for Taxation – Income Tax 67,621,930 89,345,424 +21723494 32.12

Profit/Loss after Tax 161,794,685 224,488,120 +62693435 38.74

Appropriations 55,257,878 57,249,298 -1991420 -3.6

Interim dividends paid during the 217,052,563 281,735,418 -64682855 -2.9

year

Proposed Final Dividend -149,430,633 -192,389,994 42959361 28.74

Dividend Distribution tax 1,522,026 _ 1,522,026 _

Transfer to General Reserve -147,908,607 -192,389,994 44481387 30.07

Profit/loss carried forward to 106,920,992 66,090,578 40830414 38.18

Balance Sheet

Table No. 4.2 Profit and Loss Account of NATIONAL INSURANCE CO. LTD

Apart from this to take clear snapshot of an insurance company sales we can consider the total
premium receipt during the year and the premium receipt during the years are as follows

Year Amount (in 000)

2017 125,532,297

2018 159,375,215

Table No. 4.3 Premium received by the company

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An Analysis and interpretation of the above INCOME STATEMENT reveals

Premium received are increased by 159,375,215 which is positive signal for the company that
business of the company is increasing.

180000000
159,375,215
160000000
140000000 125,532,297
120000000
100000000
80000000
60000000
40000000
20000000
0
2017 2018

Year Amount (in 000)

Graph No- 4.2 Premium received by the Company

159,375,21
5
160000000
106,920,99
120000000 2
80000000
40000000
0
2017 2018

Year Amount (in 000)

Graph No- 4.3 Profit/loss of the Company

4.3 TREND RATIO/Analysis-Trend analysis is a technique used in technical analysis that

attempts to predict the future stock price movements based on recently observed trend data.
Trend analysis is based on the idea that what has happened in the past gives traders an idea of
what will happen in the future. There are three main types of trends: short-, intermediate- and
long-term. Trend analysis is a technique employed by technical analyst in the financial industry
to predict the future movements of a given asset. They employ historical data to determine the
direction of the trend. The goal of this procedure is to identify attractive investment opportunities

19
that are currently showing an upward trend; and of course, to identify downtrends too, so
investors can get out before losing money.

Year Asset under Premium Operating Net profit

management Received (in Expenses Ratio
corers)
2014-15 11089 115 27% 8
2015-16 13726 108 27% 7

2016-17 14943 125 24% 10

2017-18 19238 159 23% 6

Table No. 4.4 Trend Analysis

25000 Asset under management in crores

20000

15000

10000

5000

Graph No- 4.4 Asset under management in crores

180 Premium Received in crores

160
140
120
100
80
60
40
20
0

Graph No- 4.5 Premium received in crores

20
 30% Operating Expenses Ratio
25%
20%
15%
10%
5%
0%

Graph No- 4.6 Operating Expenses Ratio

12 Net Profit
10
8
6
4
2
0

Graph No- 4.7 Net profit of the company.

Conclusion of the above trend ratio/ analysis: -

Asset under the companies’ hand are continuously increasing and the premium received by the company
increased in the year 2014-15 but after that is declining but trying to improve the position and increasing
in year 2016-17 & 2017-18.
Operating expenses of the company are decreasing that is 27% to 23%. Since 1906 in corporate so having
losses in the beginning but now company having profits of 6 cr.

4.4 Ratio Analysis- Ratio analysis is the comparison of line items in the financial statements
of a business. Ratio analysis is used to evaluate a number of issues with an entity, such as its liquidity,
efficiency of operations, and profitability. This type of analysis is particularly useful to analysts outside of
a business, since their primary source of information about an organization is its financial statements.
Ratio analysis is less useful to corporate insiders, who have better access to more detailed operational
information about the organization. Ratio analysis is particularly useful when used in the following two
ways:

21
Trend line. Calculate each ratio over a large number of reporting periods, to see if there is a trend in the
calculated information. The trend can indicate financial difficulties that would not otherwise be
apparent if ratios were being examined for a single period. Trend lines can also be used to estimate the
direction of future ratio performance.

Industry comparison. Calculate the same ratios for competitors in the same industry, and compare the
results across all of the companies reviewed. Since these businesses likely operate with similar fixed
asset investments and have similar capital structures, the results of a ratio analysis should be similar.

The three main categories of ratios include profitability, leverage and liquidity ratios.

 Liquidity ratio: short term financial strength

 Leverage ratio: long term financial strength
 Profitability ratio: long term earning power

Liquidity ratios measures the firm’s ability to meet current obligations.

Leverage ratios shows the proportion of the debt and equity in financing the firm’s assets.

Profitability ratios measures overall performance and effectiveness of the firm.

4.4.1 LIQUIDITY RATIOS: Liquidity ratios are measurements used to examine the
ability of an organization to pay off its short-term obligations. Liquidity ratios are
commonly used by prospective creditors and lenders to decide whether to extend credit or
debt, respectively, to companies.

These ratios compare various combinations of relatively liquid assets to the amount of
current liabilities stated on an organization's most recent balance sheet. The higher the ratio,
the better the ability of a firm of pay off its obligations in a timely manner. Examples of
liquidity ratios are: Current ratio, Quick ratio, Cash ratio, Net working capital ratio.

Current ratio. This ratio compares current assets to current liabilities. Its main flaw is that it
includes inventory as a current asset. Inventory may not be that easy to convert into cash,
and so may not be a good indicator of liquidity.
Current ratio = current asset / current liabilities
Years 2014-15 2015-16 2016-17 2017-18
Current Ratio 0.34 0.46 0.39 0.41

Table No. 4.5 Current Ratio

22
 0.5 Current Ratio
0.4
0.3
0.2
0.1
0
Current Ratio

Graph No- 4.8 Current Ratio

Inference: Solvency is increased from the year 2017-18 which is a good signal for the company.
Quick ratio: Quick ratio is the same as the current ratio, but excludes inventory. Consequently,
most remaining assets should be readily convertible into cash within a short period of time. In
finance, the quick ratio, also known as the acid-test ratio is a type of liquidity ratio, which
measures the ability of a company to use its near cash or quick assets to extinguish or retire its
current liabilities immediately. It is defined as the ratio between quickly available or liquid assets
and current liabilities. Quick assets are current assets that can presumably be quickly converted
to cash at close to their book values. A normal liquid ratio is considered to be 1:1. A company
with a quick ratio of less than 1 cannot currently fully pay back its current liabilities.

Inference: Since the company is belonging to the kind of the service sector and not having any kind
of stock with it So it will equal to current ratio.

Cash Ratio: The cash ratio compares a company’s most liquid assets to its current
liabilities. The ratio is used to determine whether a business can meet its short-term
obligations – in effect, whether it has sufficient liquidity to stay in business. It is the most
conservative of all the liquidity measurements, since it excludes inventory (which is
included in the current ratio) and accounts receivable (which is included in the quick ratio).
This ratio may be too conservative, especially if receivables are readily convertible into cash
within a short period of time. The formula for the cash ratio is to add together cash and cash
equivalents, and divide by current liabilities. A variation that may be slightly more accurate
is to exclude accrued expenses from the current liabilities in the denominator of the
equation, since it may not be necessary to pay for these items in the near term.  The
calculation is:

(Cash + Cash equivalents) ÷ Current liabilities = Cash ratio

23
 Years 2014-15 2015-16 2016-17 2017-18

Cash Ratio 0.33 0.47 0.38 0.27

Table No. 4.6 Cash Ratio

0.5
Cash Ratio
0.45
0.4
0.35
0.3
0.25
0.2
0.15
0.1
0.05
0
2014-15 2015-16 2016-17 2017-18

Graph No- 4.9 Cash Ratio

Inference: The Cash ratio indicates that the capacity of the company to realize current liabilities
with its liquidity position in the above table the cash position ratio of four years (2014-18).

Net Working Capital Ratio: The net working capital ratio is the net amount of all elements
of working capital.  It is intended to reveal whether a business has a sufficient amount of net
funds available in the short term to stay in operation. Use the following formula to calculate
the net working capital ratio: Current assets – Current liabilities = net working capital ratio

Years Net working Net Asset FA+ Ratio

capital (CA-CL) working capital

2014-15 4131999 5118269 0.80

2015-16 7453139 9377335 0.79

2016-17 1417275 1099298 1.28

2017-18 1351406 6918287 0.19

Table No. 4.7 Net
working capital ratio.

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 1.4
Net Working Capital Ratio
1.2
1
0.8
0.6
0.4
0.2
0

Graph No- 4.10 Net working Capital Ratio.

Inference: Net working capital has decrease in 2017-18 to 0.19. So, this is clearly showing that
the firm has insufficient amount of working capital.

4.4.2 Leverage Ratio: A leverage ratio is any one of several financial measurements that
look at how much capital comes in the form of debt (loans) or assesses the ability of a company
to meet its financial obligations. The leverage ratio category is important because companies rely
on a mixture of equity and debt to finance their operations, and knowing the amount of debt held
by a company is useful in evaluating whether it can pay its debts off as they come due.

Debt-Equity Ratio: The debt to equity ratio is a financial, liquidity ratio that compares a company’s
total debt to total equity. The debt to equity ratio shows the percentage of company financing that
comes from creditors and investors. A higher debt to equity ratio indicates that more creditor financing
(bank loans) is used than investor financing (shareholders)

4.4.3 Proprietary Ratio : The proprietary ratio (also known as the equity ratio) is the
proportion of shareholders’ equity to total assets, and as such provides a rough estimate of
the amount of capitalization currently used to support a business. If the ratio is high, this
indicates that a company has a sufficient amount of equity to support the functions of the
business, and probably has room in its financial structure to take on additional debt, if
necessary. Conversely, a low ratio indicates that a business may be making use of too much
debt or trade payables, rather than equity, to support operations (which may place the
company at risk of bankruptcy).Thus, the equity ratio is a general indicator of financial
stability. It should be used in conjunction with the net profit ratio and an examination of
the statement of cash flows to gain a better overview of the financial circumstances of a
business. These additional measures reveal the ability of a business to earn a profit and

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generate cash flows, respectively. To calculate the proprietary ratio, divide total
shareholders’ equity by total assets. The results will be more representative of the
company’s true situation if you exclude goodwill and intangible assets. From the
denominator. The more restrictive version of the formula is:

Shareholders’ equity ÷ Total tangible assets

Years Equity share capital Total Asset Proprietary Ratio

2014-15 6993473 2108313 3.32
2015-16 7994561 2976982 2.69
2016-17 7995649 2773570 2.88
2017-18 7996736 3025163 2.64

Table No. 4.8 Proprietary Ratio

3.5
Proprietary Ratio
3
2.5
2
1.5
1
0.5
0
2014-15 2015-16 2016-17 2017-18

Graph No- 4.11 Proprietary Ratio.

Inference: Proprietary Ratio is more than 1 every year which indicates that all the assets are
funded by the shareholders funds.

Profitability Ratio: Profitability ratios are a set of measurements used to determine the
ability of a business to create earnings. These ratios are considered to be favorable when
they improve over a trend line or are comparatively better than the results of competitors.

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Profitability ratios are derived from a comparison of revenues to difference groupings of
expenses within the income statement .
Return on Equity:
Return on equity (ROE) – expresses the percentage of net income relative to stockholders’
equity, or the rate of return on the money that equity investors have put into the business. The
ROE ratio is one that is particularly watched by stock analysts and investors. A favorably high
ROE ratio is often cited as a reason to purchase a company’s stock. Companies with a high
return on equity are usually more capable of generating cash internally, and therefore less
dependent on debt financing.
Return on Equity: profit after tax / net worth
Years Profit after tax Equity ROE
2014-15 -428090 6993473 -6.12%
2015-16 120235 7994561 1.50%
2016-17 689493 7995649 8.62%
2017-18 998430 7996736 12.49%
Table No. 4.9 Return on equity

ROE
15.00%

10.00%

5.00%

0.00%
2014-15 2015-16 2016-17 2017-18
-5.00%

-10.00%

ROE

Graph No- 4.12 Return on Equity

Inference: Return on equity ratio was 6.12, 1.50, 8.62 and 12.49 in respective year of 2015,
2016, 2017, 2018 so the company achieved maximum return on equity ratio in 2018. It means
earning higher year by year.

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Earnings per share: Earnings per share (EPS) is calculated as a company’s profit divided by the
outstanding shares of its common stock. The resulting number serves as an indicator of a
company’s profitability. It is common for a company to report EPS that is adjusted
for extraordinary items and potential share dilution. The higher a company’s EPS, the more
profitable it is considered.

Years Profit after tax No. of shares EPS

2014-15 -428090 802167 0.53
2015-16 120235 802167 0.15
2016-17 689493 802167 0.82
2017-18 998430 802167 1.24
Table No. 4.10 Earning per share

1.4

1.2

0.8

0.6

0.4

0.2

0
2014-15 20115-16 2016-17 2017-18

Graph No- 4.13 Earning per Share.

Net Profit Margin: Net profit margin is the percentage of revenue left after all expenses
have been deducted from sales.  The measurement reveals the amount of profit that a
business can extract from its total sales. The net sales part of the equation is gross sales
minus all sales deductions, such as sales allowances. The formula is:

(Net profits ÷ Net sales) x 100 = Net profit margin

This measurement is typically made for a standard reporting period, such as a month,
quarter, or year, and is included in the income statement of the reporting entity. The net
profit margin is intended to be a measure of the overall success of a business. A high net
profit margin indicates that a business is pricing its products correctly and is exercising
good cost control. It is useful for comparing the results of businesses within the same
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industry, since they are all subject to the same business environment and customer base, and
may have approximately the same cost structures.

Years Net profit Sales/technical Net profit margin

premium ac
2015-16 120325 286306 0.42
2016-17 659493 816086 0.81
2017-18 998430 960742 1.04

Table No. 4.11 Net profit margin

Net profit margin

1.2

0.8

0.6

0.4

0.2

0
2015-16 2016-17 2017-18

Net profit margin

Graph No- 4.14 Net profit margin

Inference: Net profit ratio was 42.081 and 1.04 in respective years of 2016,2017 & 2018 so the
company achieved maximum Net profit ratio 2017-18.

CHAPTER 5

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 CONCLUSION
The insurance business has earned popularity in India because of its development where as
people are becoming more aware of insurance policy. Insurance policies gives various types of
protection in trade & commerce as well as public property.

National Insurance Company Limited is a new generation insurance. It is committed to provide

high contribute to the growth of GDP of the country through stimulating trade & commerce,
creating employment opportunity for the educated youth, poverty alleviation, raising standard of
living of limited income group & overall sustainable social-economic development the country.

Analysis of financial statement is of interest to lenders (short-term as well as long term)

investors, security analysis, managers & others. Financial statement analysis may be done for for
variety of purpose, which may range from a simple analysis of the short term liquidity position
of the firm to a comprehensive assessment of the strength & weakness of the firm in various
areas. It is helpful in assessing corporate excellence, judging credit worthiness, forecasting bond
ratings, predicting bankruptcy & assessing market risk.

I have studied the attached balance sheet & profit & loss a/c of NICL. At 31st march 2018.

Overall, I would say that the two months of my internship was full of learning and wonderful
experience will I will always keep in mind through my life.

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 BIBLIOGRAPHY
 Annual reports of NICL 2014-18
 https://www.slideshare.net/9759052785/project-report-on-financial-statement-
analysis-and-interpretation-of-a-company
 https://www.slideshare.net/sanjithhn/projectonclaimsmanagementinlifeinsurance
 https://www.accountingtools.com/articles/2017/5/14/financial-statement-analysis

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