Northern Islami Insurance financial analysis: combined ratio 101.0% and a qualified 2025 audit (Oct 2026)

Investment considerations: 2025 gross premium down 23.4%, combined ratio 101.0%, a qualified audit opinion

Northern Islami Insurance PLC is a Dhaka-listed general insurer with 42,659,611 shares of Tk 10 [1 p.10]. In 2025 its gross premium fell 23.4% to Tk 690.9m and net premium fell 32.5% to Tk 315.5m [1 p.37] [1 p.13] [35]. Profit after tax was Tk 71.8m (EPS Tk 1.68) against Tk 77.3m (EPS Tk 1.81) in 2024 [1 p.11] [1 p.12]. Interest income was Tk 77.8m and underwriting profit Tk 63.0m [1 p.11]. The auditor, Rahman Mostafa Alam & Co., gave a qualified opinion on four bases: unconfirmed FDR balances, unconfirmed inter-insurer balances, independent-director numbers, and no provision for post-employment benefits [1 p.2] [1 p.3]. This note sets out what the filings show; it has no forecast, valuation or target.

Earnings mix. In 2025 underwriting profit was 64.4% of pre-tax profit and interest income 79.5% (the two add to more than 100%; the profit and loss account also deducts Tk 22.9m of expenses of management not charged to a fund and Tk 20.6m of directors' fees, audit fees, depreciation and other items) [1 p.11] [35]. In 2019 the underwriting share was 125.6% and the investment-income share 30.2% [5 p.29] [5 p.101] [35]. The revenue account prints an opening reserve for unexpired risks of Tk 195.2m and a closing reserve of Tk 128.9m; underwriting profit transferred was Tk 63.0m [1 p.13]. On net premium, net claims plus agent commission plus management expenses less reinsurance commission came to 101.0% [35].

Balance sheet. Total assets were Tk 2,699.1m at end-2025 [1 p.10]. Fixed deposits with banks (Tk 959.3m), amounts due from other insurers (Tk 531.3m) and sundry debtors (Tk 571.8m, of which advance income tax Tk 355.8m) are the three largest asset lines [1 p.10] [1 p.30]. On the liability side, outstanding claims are Tk 693.9m and sundry creditors including the provision for tax Tk 414.7m [1 p.10]. The cumulative income-tax provision is printed as Tk 379,921,697, built up from 'Upto 2021' (Tk 283,802,952) and each year since [1 p.34]. Note 9 states that 'as appeals are pending at Commissioner of Appeal, Tribunal and High Court, paid amount of "advance tax" and "advance tax deduction at source" mentioned above, could not be adjusted yet' [1 p.30].

Market facts. The shares closed at Tk 32.5 on 29-Oct-2026 [30]. On 44.79m shares after the 5% bonus issue (our derivation from 42,659,611 x 1.05), market value is Tk 1,456m [35]. That is 20.3 times 2025 profit after tax and 1.29 times the Tk 25.12 NAV per share DSE published for 30-Sep-2026 [31] [35]. These are stated as facts; we do not compare them with a value.

• Fire outstanding claims. Signpost: the fire revenue account in the FY2026 accounts (fire outstanding claims Tk 601.6m at end-2025 and Tk 580.2m at end-2024; fire claims paid Tk 3.0m in 2025).
• Premium volume. Signpost: gross premium by class in note 28 of the FY2026 accounts (Tk 690.9m in 2025, Tk 902.5m in 2024) and net premium in the Q1 2027 statement.
• Agent commission. Signpost: the agent-commission line in the FY2026 revenue account; the H1 2026 statement prints a dash. The Business Standard reported an IDRA decision on commission on 24-Dec-2025; the filings do not link them.
• The four qualification bases. Signpost: the FY2026 auditor's report, on FDR and inter-insurer confirmations, the independent-director count and post-employment benefits.
• Sadharan Bima Corporation receivable. Signpost: note 8 in the FY2026 accounts (Tk 529.1m at end-2025, Tk 518.1m at end-2024).
• Operating cash flow. Signpost: NOCFPS in the FY2026 results post on DSE (Tk (3.09) for nine months of 2026).

Business: fire 52.8% of 2025 gross premium, marine 32.2%, motor 8.3%, miscellaneous 6.8%

How it makes money. A Bangladeshi general insurer collects premium, cedes part of each risk to reinsurers (who pay a commission back), holds a reserve for the unexpired part of each policy, and pays claims, agent commission and management expenses from the rest. Northern Islami carries the reserve for unexpired risks at 40% of the year's premium income for fire, motor, miscellaneous and marine cargo, and at 100% for marine hull [1 p.14] [1 p.15] [1 p.16] [1 p.17]. Note 28 states that management expenses 'were allocated to respective revenue account on the basis of gross premium earned' [1 p.37]. Statutory reinsurance is placed with Sadharan Bima Corporation (SBC), which the auditor names in its key audit matter on reinsurance [1 p.4].

Classes. Fire is the largest class: Tk 364.5m of gross premium in 2025, 52.8% of the total (note 28 prints 53%), of which the company kept 32.4% after reinsurance [1 p.37] [1 p.14] [35]. Marine wrote Tk 222.3m and kept 61.3%; motor wrote Tk 57.3m and kept 99.8% [1 p.15] [1 p.16] [35]. Miscellaneous wrote Tk 46.7m and kept 8.1% [1 p.17] [35]. In 2024 fire gross premium was Tk 527.7m, 58% of the total (2024 annual report, note 28) [2 p.109]. Overall retention fell from 51.8% in 2024 to 45.7% in 2025 [35].

Premium history. Gross premium was Tk 351.5m in 2015 and peaked at Tk 1,100.2m in 2022 [5 p.29] [2 p.26] [1 p.10] [1 p.11]. It rose in 7 of the 10 year-on-year comparisons and fell in 2023, 2024, 2025 [35]. Over 2015-2025 the compound change was 7.0% a year (our derivation) [35]. Net premium fell from Tk 689.0m in 2022 to Tk 315.5m in 2025 [2 p.26] [1 p.13]. Retention ranged from 45.7% (2025) to 68.7% (2015) [35]. The CEO's review in the 2024 annual report states that 'our Gross Premium & Net Premium growth decelerated in 2024 as peoples' purchasing power eroded amid higher inflationary pressure' [2 p.27].

Related-party business. Note 32.02 lists premium from companies related to directors. Eight companies related to Mr. Mostafizur Rahman (Vice Chairman), among them BM Energy (BD) Ltd. (Tk 21,389,029), Apparel Promoters Ltd. (Tk 7,165,524), AL Razi Chemical Complex Ltd. (Tk 4,750,565) and Smart Jeans Ltd. (Tk 1,822,031), paid Tk 35,798,387 of premium in 2025 [1 p.40]. China Bangla Ceramic Industries Limited (Tk 11,334,974) and United Shipping Lines Limited (Tk 404,000) are listed against Mrs. Ferdousi Islam, and Alliance Knit Composite Ltd. (Tk 2,773,513) against Ms. Thamina Rahman [1 p.40]. The total is Tk 50,310,874, 7.3% of 2025 gross premium (our arithmetic); the note prints no closing balance for any of them [1 p.40] [35].

Underwriting: 2025 profit Tk 63.0m, claims ratio 28.6%, combined ratio 101.0%

Claims. Net claims in the consolidated revenue account were Tk 90.1m in 2025 against Tk 127.0m in 2024 [1 p.13]. The build-up: claims paid of Tk 17.1m, plus outstanding claims at the year-end of Tk 693.9m, less Tk 620.9m outstanding at the start [1 p.13]. On net premium the claims ratio was 28.6% in 2025 and 27.2% in 2024 [35]. Claims paid were 2.5% of the year-end outstanding balance in 2025 and 4.2% in 2024 [35].

Outstanding claims by class. Fire outstanding claims were Tk 601.6m at end-2025 (Tk 580.2m at end-2024, Tk 499.6m at end-2023 as the 2024 opening) [1 p.14]. Fire claims paid were Tk 3.0m in 2025 and Tk 6.1m in 2024 [1 p.14]. Marine outstanding claims rose from Tk 23.0m to Tk 79.7m, and marine net claims from Tk 28.8m to Tk 62.5m [1 p.15]. Motor outstanding claims fell from Tk 15.5m to Tk 12.6m, and miscellaneous from Tk 2.2m to nil [1 p.16] [1 p.17]. Fire outstanding claims are 5.1 times 2025 fire net premium (our arithmetic) [35]. The auditor's fourth key audit matter states that 'Misstatement of this liability could materially impact the financial statements and may, in severe cases, raise going concern considerations' [1 p.5].

Expenses and commission. Management expenses charged to the revenue accounts were Tk 188.4m in 2025 (Tk 231.2m in 2024), of which Tk 164.5m was general expense allocated by gross premium and Tk 23.9m direct expense [1 p.37]. That is 27.3% of gross premium against 25.6% [35]. Agent commission was Tk 87.3m, 12.6% of gross premium (2024: Tk 120.2m, 13.3%) [1 p.13] [35]. Reinsurance commission received was Tk 47.1m (2024: Tk 56.7m) [1 p.13]. Net of reinsurance commission, expenses and commission were 72.5% of net premium in 2025 and 63.1% in 2024 [35].

Reserve for unexpired risks and underwriting profit. The revenue account prints the opening reserve for unexpired risks (Tk 195.2m) on the credit side and the closing reserve (Tk 128.9m) on the debit side [1 p.13]. Underwriting profit transferred to the profit and loss account was Tk 63.0m [1 p.13]. For 2024 the printed opening reserve was Tk 235.4m, the closing reserve Tk 195.2m and underwriting profit Tk 85.8m [1 p.13]. By class, fire swung from a loss of Tk 20.8m in 2024 to a profit of Tk 17.7m, marine fell from Tk 55.9m to Tk 18.3m, motor from Tk 30.3m to Tk 23.8m and miscellaneous from Tk 20.4m to Tk 3.2m [1 p.11].

Eleven years of underwriting. Underwriting profit was Tk 131.0m in 2015 and Tk 63.0m in 2025; the margin on net premium ranged from 16.4% (2022) to 54.2% (2015) [5 p.29] [2 p.26] [1 p.10] [1 p.11] [35]. The company's financial summaries print no class split of claims before the class revenue accounts, and the 2019 summary prints gross claims paid (Tk 80.2m in 2019) on a different basis from the net claims above [5 p.29].

Investments: Tk 959.3m of FDRs in 48 institutions, Tk 187.6m of treasury bonds, interest income Tk 77.8m

Interest income. 'Interest Income' in the profit and loss account was Tk 77,828,819 in 2025 and Tk 75,186,742 in 2024; other income was Tk 527,977 and Tk 784,044 [1 p.11]. The 2024 annual report's CEO review prints investment income of Tk 75.18m for 2024 and Tk 37.95m for 2020 [2 p.26]. On the printed summaries investment income rose in each year from 2017 to 2025, from Tk 14.4m in 2016 [5 p.29] [2 p.26] [1 p.11].

Deposits. The largest FDR balances at end-2025 were Al Arafah Islami Bank Limited (Tk 183.1m), Social Islami Bank Limited (Tk 163.9m), First Security Islami Bank Limited (Tk 86.0m) and Islami Bank Bangladesh Limited (Tk 52.1m) [1 p.31]. The list includes Tk 16,604,090 with International Leasing and Financial Service Limited and Tk 1,600,000 with People's Leasing and Financial Services Ltd. [1 p.31]. Note 10.1.1 states that 'the management of the Company assumes that the aforesaid financial assets are recoverable. Accordingly, no impairment loss has been recognised against such investments at this stage' [1 p.32]. FDRs fell 7.7% in 2025; the cash-flow statement shows Tk 80.0m net withdrawn from FDRs [1 p.19] [35].

Bonds and shares. Note 6.01 states that the treasury bond holding 'includes is made as per section 23, schedule - 1 of the Insurance Act - 2010 being statutory deposit with Bangladesh Bank' [1 p.29]. Accrued interest on the treasury bond is calculated 'at the rate varied from 6.44% to 12.75%' (note 7.02) [1 p.30]. The AIBL subordinated bond of Tk 50.0m bought on 01.11.2020 is redeemed at 20% a year after two years; Tk 20.0m remained at end-2025 [1 p.29]. The listed-share portfolio had a market value of Tk 155,639 at end-2025, the largest holding being Fine Foods Limited (Tk 90,511) [1 p.29] [1 p.30].

Yield arithmetic. Interest income of Tk 77.8m in 2025 was 6.1% of the average of the investment, FDR and cash total at the two year-ends (our arithmetic) [35]. Investment including FDR grew from Tk 178.7m in 2015 to Tk 1,249.7m in 2024, and was Tk 1,168.8m at end-2025 on our derivation (investment Tk 209.5m plus FDR Tk 959.3m) [5 p.29] [2 p.26] [1 p.10] [1 p.11] [35].

Ratios 2015-2025: ROE 6.7% in 2025, equity 40.3% of total assets

Returns. Return on average equity was 6.7% in 2025 and ranged from 6.7% (2025) to 9.0% (2019) over the 7 years for which two year-end equity figures are printed [35]. Return on average assets fell each year from 2016 to 2025, from 5.9% to 2.6% [35]. Profit after tax rose each year from 2015 (Tk 64.2m) to 2023 (Tk 77.9m), and fell in 2024 and 2025 [5 p.29] [2 p.26] [1 p.10] [1 p.11]. The compound change in profit after tax over 2015-2025 was 1.1% a year (our derivation) [35].

Earnings mix over time. Underwriting profit was more than pre-tax profit in each year from 2019 to 2023 (between 109.3% and 125.6% of PBT), and 84.8% in 2024 and 64.4% in 2025 [35]. Investment income rose from 30.2% of PBT in 2019 to 79.5% in 2025 [35]. The tax charge was 26.7% of PBT in 2025, including a deferred-tax credit of Tk 3.6m [1 p.11] [35].

Leverage and capital. Equity was 40.3% of total assets at end-2025; over the years with printed equity it ranged from 38.7% (2023) to 59.1% (2018) [35]. Net premium was 0.29 times equity in 2025 and 0.70 times in 2022 [35]. Equity includes a reserve for exceptional losses of Tk 428.6m and a revaluation reserve of Tk 110.9m, from which Tk 6.2m was transferred to retained earnings in 2025 [1 p.10] [1 p.32]. The 2025 cash dividend of 5% (Tk 42,659,611 appropriated) was 59.4% of profit after tax (our arithmetic) [1 p.12] [35].

Peers 2025: Northern Islami's combined ratio of 101.0% is the second-highest of 24 listed general insurers

We compare Northern Islami with the 23 listed general insurers that have published AnalystBro notes, using each company's own 2025 revenue account on the company basis and one combined-ratio definition: net claims plus management expenses (including any separately printed stamp line) plus agency commission, less reinsurance commission including profit commission, all over net premium [35]. For Northern Islami the inputs are the consolidated revenue account lines 'Agent commission', 'Expenses of management' and 'Commission on re-insurances ceded' [1 p.13]. Opinion labels come from each peer's filing or its checked published note. Northern Islami's own opinion is qualified [1 p.2]; 7 peers also have modified opinions (BGIC, Eastern, Asia Pacific, Federal, Republic and Sonar Bangla qualified, Central adverse), marked *, and we give ranks with and without them [35].

What the table shows. On unrounded figures Northern Islami's combined ratio of 101.0% is the second-highest of 24; Mercantile Islami is the highest at 110.7% [35]. 2 of the 24 are above 100%: Northern Islami, Mercantile Islami [35]. Counting Northern Islami with the 16 peers that have unmodified opinions, it is the second-highest of 17 [35]. The median of the other 23 is 72.7% (our arithmetic) [35]. Northern Islami's expense ratio of 72.5% is the third-highest of 24 (third-highest of 17 on the unmodified basis), and its claims ratio was 28.6% [35]. Its net premium of Tk 315.5m is the third-smallest of the 24 [35].

Labels and basis. Printed labels differ. Northern Islami prints 'Agent commission' and 'Expenses of management' [1 p.13]; Phoenix prints 'Commission' [7 p.216]; Green Delta prints 'Agency commission' and 'Management expenses' in its company 'Consolidated All Business Revenue Account' [29 p.344]. City prints 'Insurance stamp expenses' and 'Profit commission' separately, Crystal prints 'Stamp duty' separately, and we add each to the matching line [8 p.394] [9 p.13]. Federal's revenue account prints a 'Commission on Re-Insurance Accepted' line read as 420.33 in the text layer; it is excluded and Federal's agency commission is the printed Tk 76,015,882 [22 p.14]. Pragati and Reliance inputs are the unrounded printed figures [25 p.10] [26 p.365]. All figures are company figures; 'consolidated' in these titles refers to the sum of the class accounts. * Modified opinion: Northern Islami, BGIC, Eastern, Asia Pacific, Federal, Republic and Sonar Bangla qualified; Central adverse. Peers write different mixes of fire, marine, motor and miscellaneous business, and the table does not adjust for that.

Balance sheet and audit: a qualified opinion on four bases, four emphasis-of-matter paragraphs

Two printings of the end-2025 cash line. The audited statement prints FDRs of Tk 959,284,180 and cash of Tk 71,522,200, which add to Tk 1,030,806,380 (our arithmetic) [1 p.10]. The Q2 2026 balance sheet prints 'Cash and bank balances (Including FDR)' of Tk 1,030,882,884 for December 31, 2025, and its cash-flow statement uses the same opening figure [6 p.1] [6 p.3]. The difference is Tk 76,504. The same Q2 balance sheet prints sundry debtors of Tk 571,727,213 and stock of printing and stationery of Tk 1,581,949 for December 31, 2025 [6 p.1], against Tk 571,803,718 and Tk 972,298 (plus insurance stamps of Tk 609,650) in the audited statement [1 p.10].

Receivables from other insurers. Note 8 lists Tk 531,324,668 due from other insurers at end-2025, of which Sadharan Bima Corporation is Tk 529,145,749 (99.6%) [1 p.30] [35]. The other eleven insurers' balances total Tk 2,178,919 (our arithmetic) and each is printed at the same amount at end-2024 and end-2025 [1 p.30] [35]. The note states: 'The above amount is due from Shadharan Bima Corporation on account of re-insurance arrangements, public sector business and Co-insurance scheme with other General Insurance Companies' [1 p.30].

Auditor's opinion (quoted from the page image). Rahman Mostafa Alam & Co., Chartered Accountants (Md. Mustafizur Rahman FCA, Managing Partner, Enrolment No. 0218), signed on 12 May 2026 [1 p.9]: 'In our opinion, except for the effects of the matter described in the Basis for Qualified Opinion section of our report, the accompanying financial statements present fairly, in all material respects, the financial position of the company as at December 31, 2025 and its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards (IFRSs), The Companies Act 1994, the Insurance Act 2010, the Insurance rules 1958, the Securities and Exchange Rules 1987 and other applicable laws and regulations.' [1 p.2]

• 1. Non-Receipt of FDR Balance Confirmations: 'We issued FDR balance confirmation requests in respect of 882 FDRs amounting to Tk. 959,284,180. As at the reporting date, confirmations for 135 FDRs amounting to Tk. 133,755,509 had been received, while confirmations for the remaining 747 FDRs amounting to Tk. 825,528,671 were not received. However, we obtained the relevant FDR statements and instruments.'
• 2. Non-Receipt of Third-Party Confirmations for Inter-Insurance Balances (Ref. Note No. 9 & 18): 'We issued third-party confirmation requests in respect of Current Assets under "Amount Due from Other Persons or Bodies Carrying on Insurance Business" amounting to BDT 531,324,668 and Current Liabilities under "Amount Due to Other Persons or Bodies Carrying on Insurance Business" amounting to BDT 150,989,835. However, as of the reporting date, the confirmations have not yet been received from the respective parties.'
• 3. Non-Compliance with Corporate Governance Code Regarding Independent Directors (Ref. Note No. 12): 'The Company has not complied with Clause 1(2)(a) of the Corporate Governance Code, 2018, issued by the Bangladesh Securities and Exchange Commission (BSEC), which requires that at least one-fifth of the Board of Directors be Independent Directors. For a Board comprising 16 directors, a minimum of four (4) Independent Directors is mandated. The current Board composition includes only two (2) Independent Directors, resulting in a statutory shortfall. However, the existing composition of the Board is in compliance with the provisions of the Insurance Act, 2010.'
• 4. Non-Recognition of Post-Employment Benefit Liability in Compliance with Labour Law Requirements: 'The entity has not made any provision for post-employment benefits as required under Sections 14-16 and 19-23 of the Bangladesh Labour Act, 2006. Accordingly, the liability for employee benefits may be understated and the financial statements are not in compliance with the applicable legal requirements.'

• 'We draw attention to the following matters disclosed in the financial statements.'
• 1. 'We draw attention to Note: 3.16 of the Financial Statements, which describes the reason for not establishing Workers' Profit Participation Fund by the Company according to the Labor Act. 2006 (as amended in 2013 and 2018);'
• 2. 'Management has described the reason for not performing impairment test in accordance with IFRS 9 regarding the investment on FDR in People's Leasing and Financial Service and International Leasing and Financial Service Ltd. carrying at BDT 1,600,000 and BDT 16,604,090 respectively as at December 31. 2025 in note:10 of the financial statements.'
• 3. 'As disclosed in note 3.21 to the financial statements where it has been described the reason for departure from IFRS 16 (Lease) during the year in the financial statements.'
• 4. 'We draw attention (Note No. 20) which describe, Non-Transfer of Long Outstanding Unclaimed Dividend to Capital Market Stabilization Fund. And,'
• 'Our opinion is not modified in respect of these matters:'

Key audit matters. The auditor lists four: '1. Recognition of Premium Income', '2. Accounting for Reinsurance Contracts', '3. Agency Commission and Deferred Acquisition Costs' and '4. Estimated liability in respect of outstanding claims, whether due or intimated, and claim Payment' [1 p.4] [1 p.5]. Each is quoted in full below [1 p.4] [1 p.5] [1 p.6]. Basis 2 refers to 'Note No. 9 & 18', where note 8 holds the amount due from other insurers and note 9 sundry debtors [1 p.2] [1 p.30].

• KAM 1, 'Recognition of Premium Income.' Key audit matter: 'See form XL of the financial statements. Gross general insurance premiums represent the total premiums received for policies issued during the financial year. We identified premium income recognition as a key audit matter due to the high volume of transactions and its material significance to the financial statements. There is an inherent risk regarding the accuracy of calculating unearned premiums and ensuring revenue is recognized in the correct accounting period.' Response: 'Our audit procedures focused on substantive testing and included the following: * Process Understanding: Obtained an understanding of the Company's manual and system-based processes for recording premium income. * Substantive Sampling: Selected a sample of recorded premium transactions during the year and traced them to supporting documents, such as copies of insurance policies, money receipts, and bank statements. * Cut-off Procedures: Checked a sample of insurance policies issued immediately before and after the year-end to assess whether the premium income was recorded in the correct accounting period. * Mathematical Accuracy: Checked the mathematical accuracy of the unearned premium reserve calculation based on regulatory guidelines. * Regulatory Disclosures: Assessed whether the disclosures related to premium income in the financial statements comply with the Insurance Act, 2010, and applicable accounting standards.'
• KAM 2, 'Accounting for Reinsurance Contracts.' Key audit matter: 'See Consolidated Revenue Account of the financial statements. The Company participates in reinsurance arrangements to manage its underwriting risks, including statutory reinsurance with Sadharan Bima Corporation (SBC). We identified the accounting for reinsurance as a key audit matter because the calculation of ceded premiums, reinsurance commissions, and reinsurance recoveries involves applying specific treaty rates and regulatory guidelines, requiring dedicated audit attention.' Response: 'Our audit procedures focused on substantive testing and included the following: * Process Understanding: Obtained an understanding of the Company's process for calculating and recording reinsurance premiums and commissions. * Treaty Review: Read a sample of reinsurance treaties to understand the basic terms and coverage applicable to the financial year. * Substantive Recalculation: On a sample basis, checked the mathematical accuracy of the premium ceded and reinsurance commissions earned based on the applicable treaty rates. * Reconciliation Check: Checked a sample of year-end balances due to and due from reinsurers (including SBC) against available statements of account. * Disclosures: Assessed the adequacy of the disclosures regarding reinsurance balances in the financial statements.'
• KAM 3, 'Agency Commission and Deferred Acquisition Costs.' Key audit matter: 'See Consolidated Revenue Account to the financial statements. The Company incurs acquisition costs, primarily commissions paid to insurance agents for procuring business. We identified this as a key audit matter because calculating the deferral of these costs (Deferred Acquisition Costs) over the life of the policies requires systematic attention, and there is a need to ensure the commission rates applied comply with the limits prescribed by the Insurance Development and Regulatory Authority (IDRA).' Response: 'Our audit procedures focused on substantive testing and included the following: * Process Understanding: Obtained an understanding of the process for approving and calculating agency commissions. * Regulatory Compliance: Checked the commission rates applied by the Company against the approved rates and circulars issued by IDRA for a sample of policies. * Substantive Sampling: Selected a sample of commission payment vouchers and traced them to the corresponding insurance policies to check the accuracy of the calculation. * Mathematical Accuracy: Checked the mathematical accuracy of the Deferred Acquisition Cost calculation on a sample basis, observing whether it aligned with the unearned premium reserve timeline. * Disclosures: Assessed whether the accounting policies and disclosures regarding acquisition costs were appropriate.'
• KAM 4, 'Estimated liability in respect of outstanding claims, whether due or intimated, and claim Payment.' Key audit matter: 'The estimated liability for claims due or reported but not settled involves considerable management judgment and estimation. Misstatement of this liability could materially impact the financial statements and may, in severe cases, raise going concern considerations.' Response: 'Our response to the risk: We assessed both the control environment and undertook extensive substantive testing as follows: *Evaluated the design and tested the operating effectiveness of controls over the claim's recognition and estimation process. *Obtained the claims register and tested, on a sample basis, the completeness of recorded claims. *Cross-verified a sample of claims with corresponding policy documents and claim forms. *Discussed with management the methodology and assumptions used in estimating outstanding claims and challenged their reasonableness where appropriate. *Reviewed minutes from claims committee meetings to assess decision-making processes related to significant or disputed claims. *For a sample of paid claims, traced transactions to supporting documentation, including intimation letters, surveyor reports, payment registers, bank statements, and ledger entries. *Evaluated the adequacy and appropriateness of related disclosures in accordance with the Insurance Act, 1938 (as amended in 2010), Insurance Rules, 1958, and other applicable regulations.'

Company explanations. On the FDRs, note 10.1.2 states that People's Leasing 'faced a wide range of financial scams from 2004' and that 'This whole issue under the supervision of the High Court of Bangladesh and that's why we can't provide any kind of conclusive evidence to the auditor regarding the FDR (Tk. 16,00,000) of PLFSL' [1 p.32]. On unclaimed dividend, note 20 states that dividends of Tk 1,058,278 (Mr. Barrister Faysal Ahmed Patwary) and Tk 4,172,000 (Mr. Saharier Khaled) are 'withheld in compliance with the Hon'ble High Court order under Writ Petition No. 4976/2016 pending final judgment', and that 'the remaining unclaimed dividend of Tk. 2,687,249 will be paid subsequently' [1 p.34]. Unclaimed dividend was Tk 16,448,598 at end-2025 against Tk 9,906,694 a year earlier [1 p.34].

Earlier opinions. DSE posted on 19-May-2025 that the auditor gave an 'Emphasis of Matters' paragraph for 2024, and on 2-Jun-2026 that it gave a 'Qualified Opinion and Emphasis of Matter paragraph' for 2025 [31].

2026 to date: H1 net premium down 51.2%, H1 profit after tax Tk 38.1m against Tk 41.9m, nine-month EPS Tk 1.32

First half of 2026. Net premium fell 51.2% to Tk 87.95m in the half to June 2026 [6 p.2] [35]. The agent-commission line prints a dash for H1 2026 against Tk 36.2m a year earlier [6 p.2]. Net claims fell to Tk 12.5m, 14.3% of net premium against 29.4% [35]. Underwriting profit was Tk 51.1m against Tk 48.9m [6 p.2]. EPS was Tk 0.89 against Tk 0.98 [6 p.2]. Net cash from operating activities was minus Tk 46.2m, with premium collections of Tk 205.4m against Tk 274.3m [6 p.3].

Two presentations of H1 profit. The H1 2026 profit and loss account prints 'Net Profit after tax' of Tk 38,057,613 (H1 2025: Tk 41,875,992) [6 p.2]. The statement of changes in equity in the same filing prints 'Profit after tax for the period' of Tk 33,659,920 for 2026 and Tk 32,869,059 for 2025, with the reserve for exceptional losses addition (Tk 4,397,693 and Tk 9,006,933) on a separate 'Addition during the period' row [6 p.4]. The two rows add to the profit and loss figure in each half (our arithmetic) [35]. The statement labels both opening rows 'Balance as on 1st January, 2025' [6 p.4]. The closing equity of Tk 1,125,142,490 is the same on the balance sheet and the statement of changes in equity [6 p.1] [6 p.4].

Third quarter (DSE-announced). On 1-Nov-2026 DSE posted Q3 results from the board meeting of 29-Oct-2026: EPS of Tk 0.47 for July-September 2026 against Tk 0.43, Tk 1.32 for nine months against Tk 1.36, NOCFPS of Tk (3.09) against Tk 0.18, and NAV per share of Tk 25.12 at 30-Sep-2026 [31]. The 2025 comparatives in that post differ from the 2025 Q3 post (nine-month EPS Tk 1.43, NOCFPS Tk 0.19, NAV per share Tk 25.23); each 2025 figure in the 2026 post equals the original divided by 1.05, the 5% bonus factor (our arithmetic: 1.43/1.05 = 1.36, 0.19/1.05 = 0.18, 25.23/1.05 = 24.03); the post does not state a basis [31] [35]. The company gave as the reason for the NOCFPS deviation that 'indicator of income was decreased and claim and income tax paid increased in the period than previous period' [31]. The Q3 2026 statements were not in the corpus at 1-Nov-2026.

Commission context. The Business Standard reported on 24-Dec-2025 that IDRA had scrapped commission payments in the non-life insurance sector [32]. The H1 2026 statement prints no agent commission [6 p.2]; the filings do not link them.

Governance: directors held 31.0% at end-2024, two independent directors, 5% cash and 5% stock dividend for 2025

Board (2025 notes). Note 32.01 lists 14 directors: Al-haj Nasiruddin (Chairman), Mr. Mostafizur Rahman (Vice Chairman), Mr. Mortuza Siddique Chowdhury, Mr. Mohammad Azam, Mr. Abdullah Jamil Matin, Mrs. Naiyer Sultana, Ms. Thamina Rahman, Mr. Faysal Ahmed Patwary, Mrs. Ferdousi Islam, Mrs. Tasmin Saida Chowdhury, Broadway Impex Company Ltd. (represented by Mr. Kazi Salahuddin Ahammad, Nominated Director), Carolina Business Enterprises Ltd. (represented by Mr. Sarwar Salim, Nominated Director), and Mrs. Umme Habiba Akhter and Mr. Zafar Alam (Independent Directors) [1 p.38] [1 p.39]. The auditor's basis 3 refers to 'a Board comprising 16 directors' [1 p.2]. The 2025 filing in the corpus is the 46-page audited statements with no directors' report, attendance table or governance annexure; those were not in the corpus at 1-Nov-2026.

Directors' other positions (as printed). Mr. Mostafizur Rahman is listed as Chairman of Smart Jeans Ltd., Apparel Promoters Ltd., AL Razi Chemical Complex Ltd. and other companies, and Managing Director of BM Energy (BD) Ltd., Chittagong Denim Mills Ltd. and City Home Properties Ltd., among 15 entries [1 p.38]. Mr. Abdullah Jamil Matin is listed as Vice Chairman of Rupali Life Insurance Company Limited and Director of Metropolitan Medical Center Limited [1 p.38]. Mrs. Ferdousi Islam is listed as Chairman of China Bangla Ceramic Industries Limited, Trustee Securities Limited and the SIMCO companies [1 p.39]. Mr. Mortuza Siddique Chowdhury is Managing Director of Mortuza Assets Limited and Chairman of MARSA Holding Limited [1 p.38].

Shareholding (end-2024). The 2024 annual report lists 12 directors holding 13,225,432 shares, 31.000% of the company, with individual holdings from 2.009% (Mr. Mostafizur Rahman) to 4.208% (Md. Sarwar Salim, Nominated Director); the CEO and CFO hold nil [2 p.41]. The management-team page names Mr. Chowdhury Golam Faruque as Managing Director & CEO and Mr. Sujit Kumar Dey FCA as Deputy Managing Director (CFO) [2 p.18]. Note 31 of the 2025 accounts states that the CEO 'has been appointed with the approval from Insurance Development & Regulatory Authority (IDRA)' and that his salaries and allowances were Tk 7,073,387 in 2025 and Tk 5,850,000 in 2024 [1 p.37]. DSE posted on 19-Jun-2025 that Mr. Biddut Kumar Samadder CAP 'has been charged as Company Secretary' [31].

Independent directors: two printings. The 2024 compliance report on the Corporate Governance Code ticks condition 1(2)(a), 'At least one-fifth (1/5) of the total number of directors shall be Independent Directors (ID)', in the 'Complied' column with the remark 'As per insurance act 2010' [2 p.53]. The 2025 auditor's basis 3 states that the company 'has not complied with Clause 1(2)(a)' [1 p.2].

Dividends. For 2024 the board recommended a 10% cash dividend (DSE post 30-Apr-2025) [31]. On 28-Sep-2025 DSE placed the shares in the 'Z' category 'regarding non-disbursement of the approved dividend within the stipulated time frame', and on 5-Oct-2025 posted the disbursement and a return to 'A' from 6-Oct-2025 [31]. For 2025 the board recommended 5% cash and 5% stock (record date 28-Jun-2026, AGM 29-Aug-2026 on a digital platform); the company stated that the stock dividend was not declared 'from capital reserve or revaluation reserve or any unrealized gain' [31]. DSE posted on 5-Oct-2026 that the bonus shares were credited and the cash dividend disbursed [31]. The appropriation account for 2025 shows a cash dividend of Tk 42,659,611 [1 p.12].

Rating. ARGUS Credit Rating Services rated claim-paying ability 'AAA' long term and 'ST-1' short term (DSE post 18-May-2025), and 'AA+' and 'ST-2' 'along with Negative outlook' on financials to December 31, 2025 and Q1 2026 (DSE post 19-May-2026) [31].

Board-meeting dates. The board meeting for the 2025 accounts and Q1 2026 was first set for 29-Apr-2026, postponed 'due to unavoidable circumstances' (DSE post 29-Apr-2026), and held on 12-May-2026 [31]. The auditor's report and statements are dated 12 May 2026 [1 p.9] [1 p.10]. A year earlier, both were considered on 29-Apr-2025 [31]. The company changed its name from 'Northern Islami Insurance Limited' to 'Northern Islami Insurance PLC.' with effect from 03-Mar-2025 [31]. The 24-month DSE sweep (1-Nov-2024 to 2-Nov-2026) shows no board approval of capital expenditure, a rights issue or an acquisition [31].

What's next: dated events after 31-Oct-2026 and the lines they relate to

These are dated events after 31-Oct-2026. We do not forecast numbers. Dates marked 'inferred' are ranges covering every printed precedent: the 'Financial Calendar' and dividend/AGM rows of the 2022, 2023 and 2024 annual reports (submission dates for 2021-2023 accounts, record dates and AGM dates) and the DSE archive for 2025-2026 (board-meeting, record and AGM dates); no date has been notified for any of them [4 p.9] [3 p.9] [2 p.9] [31]. Where a range end fell on a Friday or Saturday it is moved to the nearest DSE business day inside the precedents. The Q3 2026 results (board meeting 29-Oct-2026) are covered in the text above.

Commission line. The Business Standard reported the IDRA commission decision on 24-Dec-2025 [32]. The H1 2026 statement prints no agent commission [6 p.2]. The filings do not link them.

Auditor's items. The four qualification bases and four emphasis-of-matter paragraphs in the 2025 report have no resolution date in the filings [1 p.2] [1 p.3]. The FY2026 audit report, released with the FY2026 results, is where each will next be reported.

LDC graduation. Bangladesh's LDC graduation date is 24-Nov-2029 [33] [34].

Risks: each item and the line it relates to

Each row states a fact from the filings or DSE and the line it sits in; no row is a forecast. Where the line is 'None disclosed', the filings do not tie the item to a figure.

• Fire outstanding claims and claims paid in the FY2026 fire revenue account.
• Gross premium by class (note 28) and agent commission in the FY2026 accounts.
• The FY2026 auditor's report: FDR and inter-insurer confirmations, the independent-director count, and post-employment benefits.
• Note 8 (amount due from SBC) and note 10 (FDRs with International Leasing and People's Leasing) in the FY2026 accounts.
• NOCFPS in the FY2026 results post on DSE.

History 2015-2025 and market data

Figures for 2015-2019 come from the 2019 annual report's financial summary, with 2018-2019 equity, NAV per share and 2019 profit before tax from its notes; 2020-2024 come from the CEO's review table in the 2024 annual report; 2025 comes from the audited statements [5 p.29] [5 p.101] [2 p.26] [1 p.10] [1 p.11]. The 2019 summary prints no profit before tax for 2015-2018 or equity for 2015-2017; those cells are blank. For 2024 the CEO's review prints net premium of Tk 467.27m and the 2025 revenue account Tk 467,276,625; the 2025 investment income is the 'Interest Income' line. Shares were 42,659,611 throughout 2018-2025 [2 p.26] [1 p.10].

Market data (facts only). The shares closed at Tk 32.5 on 29-Oct-2026 [30]. On the bonus-adjusted series the close was 13.4% above the adjusted Tk 28.67 close of 30-Oct-2025 (Tk 30.1 unadjusted) [30] [35]. Between 30-Oct-2025 and 29-Oct-2026, unadjusted DSE closes ranged from Tk 25.7 (13-Nov-2025) to Tk 44.6 (10-Aug-2026), with no ties; closes before the 28-Jun-2026 record date are restated from the adjusted feed by the 5% bonus factor (scratch/bars_used.json) [30] [35]. Market value at Tk 32.5 on 44.79m shares (derived) was Tk 1.46bn: 20.3 times 2025 profit after tax of Tk 71.8m and 1.29 times NAV per share of Tk 25.12 at 30-Sep-2026 [35].

FAQ

How profitable was Northern Islami Insurance in 2025?

Profit after tax was Tk 71.8m (EPS Tk 1.68) against Tk 77.3m (EPS Tk 1.81) in 2024. Underwriting profit fell to Tk 63.0m from Tk 85.8m, and interest income rose to Tk 77.8m from Tk 75.2m. Profit before tax was Tk 97.9m.

What is Northern Islami Insurance's combined ratio?

101.0% in 2025 and 90.3% in 2024, measured as net claims plus management expenses plus agent commission less reinsurance commission, over net premium. On the same definition it is the second-highest of 24 listed general insurers with published AnalystBro notes. Underwriting profit was Tk 63.0m in 2025.

Why is the 2025 audit opinion qualified?

Rahman Mostafa Alam & Co. gave four bases: confirmations not received for 747 of 882 FDRs (Tk 825.5m); confirmations not received for Tk 531.3m due from and Tk 151.0m due to other insurers; two independent directors on a board of 16 against four required by the BSEC code; and no provision for post-employment benefits under the Labour Act 2006.

How large are Northern Islami's outstanding claims?

Tk 693.9m at end-2025, up from Tk 620.9m, of which fire Tk 601.6m and marine Tk 79.7m. Claims paid during 2025 were Tk 17.1m in total. Fire claims paid in 2025 were Tk 3.0m. At 30-Jun-2026 outstanding claims were Tk 701.2m (unaudited).

What dividend did Northern Islami pay for 2025?

5% cash and 5% stock, with a record date of 28-Jun-2026; DSE posted on 5-Oct-2026 that the bonus shares were credited and the cash dividend disbursed. For 2024 it paid 10% cash; the shares were in the 'Z' category from 28-Sep-2025 to 6-Oct-2025 over the timing of that payment.

Who are Northern Islami's related parties?

Note 32.02 lists Tk 50.3m of 2025 premium from companies linked to directors: Tk 35.8m from eight companies related to Vice Chairman Mr. Mostafizur Rahman (largest BM Energy (BD) Ltd., Tk 21.4m), Tk 11.7m from two related to Mrs. Ferdousi Islam and Tk 2.8m from Alliance Knit Composite Ltd. (Ms. Thamina Rahman). No closing balances are printed.

What do the 2026 interim figures show?

H1 2026 net premium was Tk 88.0m against Tk 180.1m and profit after tax Tk 38.1m against Tk 41.9m (EPS Tk 0.89 against Tk 0.98). DSE-announced nine-month EPS was Tk 1.32 against Tk 1.36, with NOCFPS of Tk (3.09) and NAV per share of Tk 25.12 at 30-Sep-2026.

Sources

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