Insurers seek more time citing pandemic

Twenty insurance companies have made no visible progress in getting listed on the stock exchange, although the deadline expired in December 2019.  

At a meeting with insurance companies’ chairmen and managing directors on September 15, 2019, Finance Minister AHM Mustafa Kamal instructed 27 firms to be listed within December 31 that year.  

But only seven have been listed so far, said the Insurance Development and Regulatory Authority (IDRA). They are: Sonali Life Insurance, Desh General Insurance, Express Insurance, Crystal Insurance, Union Insurance, and Sena Kalyan Insurance. 

Of the 20 companies, the IDRA has issued show-cause notices to Swadesh Life Insurance and South Asia Insurance for not informing it when they will be listed.

Besides, the Bangladesh Securities and Exchange Commission (BSEC) has rejected Chartered Life insurance’s initial public offering (IPO) application. 

The remaining 17 companies have sought more time from the IDRA to be listed. 

The IDRA said the companies were seeking time to submit their IPO applications because of the Covid-19 pandemic. 

Of the 17 companies, 12 have committed to being listed within December this year. They are: Guardian Life Insurance, LIC (Bangladesh), Homeland Life Insurance, Protective Islami Life Insurance, Alfa Islami Life Insurance, Best Life Insurance, Mercantile Islami Life Insurance, Trust Islami Life Insurance, Meghna Insurance, Sikder Insurance, Golden Life Insurance, and Islami Commercial Insurance. 

The remaining five have committed to getting listed within June 2022. They are: Sunflower Life Insurance, Zenith Islami Life Insurance, Jamuna Life Insurance, NRB Global Life Insurance, and Diamond Life insurance.

IDRA Executive Director SM Shakil Akhter told The Business Post that the companies yet to submit their IPO applications had been instructed to do so as soon as possible. 

He said the companies had sought time due to the pandemic and their request were granted. 

“We will take necessary steps if they fail to be listed by then,” he added. 

The IDRA law requires insurance companies to be listed within three years of registration. If they fail to meet the deadline for valid reasons, they can be granted another six months. 

But if they still fail to be listed by then, they must pay Tk 5,000 in fines per day as per the Insurance Act 2010. The fine was Tk 1,000 per day previously but was increased to Tk 5,000 from January 2011.  

The companies yet to be listed said they were preparing after getting the IDRA instructions. Most of them have already appointed issue managers as well. 

Chief Executive Officer of Trust Islami Life Insurance Mohammad Gias Uddin told The Business Post they would submit the IPO application within 120 days after submitting the December 2021 financial statement. 

He said they would hopefully be listed by 2023.

Zenith Islami Life Insurance Chief Executive Officer SM Nuruzzaman told The Business Post they had initially applied to the IDRA for share placement. 

“If the IDRA approves, we will submit our application to the BSEC within 120 days after submitting the June 2022 financial statement,” he said.  

Mohammad Saidul Amin, managing director and chief executive officer of Mercantile Islami Life Insurance, told The Business Post they had already appointed the issue manager. 

He said they would be listed after submitting the December 2021 financial statement. At the request of the IDRA, the BSEC reduced the minimum amount insurance companies need to raise for listing under the fixed price method from Tk 30 crore to Tk 15 crore or more. It was done to make it easy for these companies to be listed.  

The companies were informed of the relaxed requirement through letters on October 7 last year. At present, 79 insurance companies are operating in Bangladesh. Of them, 51 are listed on the stock exchange.