BSEC taps IDRA to push for listing 26 insurers

The securities regulator has written to the insurance regulator Insurance Development and Regulatory Authority (IDRA) requesting to take the necessary steps for getting listed 26 insurance companies by investing at least 20 per cent of their equity in the capital market.

The move has been taken to increase the money supply to the stock market that is currently witnessing lackluster trade.

The insurance companies having less than Tk 30 crore in paid-up capital must invest at least 20 per cent of their equity in the capital market if they want to get listed, according to the letter written by the Bangladesh Securities and Exchange Commission (BSEC) on Tuesday.

“We are requesting you to take the necessary initiatives to encourage the said insurance companies to file applications for initial public offers under the fixed price method as well as invest at least 20 percent of the equity of each company in the stock exchanges,” said the BSEC.

“As a regulatory organisation for the insurance industry, we expect your valuable support regarding the listing of the insurers,” it added.

The BSEC exempted 26 insurance companies filing applications for initial public offers under the fixed price method. “Despite the exemption, the insurance companies have not been taken any initiative so far to file IPO applications,” the BSEC noted.   

“The insurance sector plays a vital role in the growth and sustainability of the capital market in Bangladesh. The BSEC highly values the exceptional contribution of the insurance sector as well as IDRA to the stock market,” BSEC spokesperson Mohammad Rezaul Karim told The Business Post.

Currently, 79 insurance companies are operating in the country. Of them, 53 are listed on the stock exchanges.

On September 15, 2019, Finance Minister AHM Mustafa Kamal, at a meeting with insurance companies’ chairmen and managing directors, instructed 27 insurance companies to be listed by 2019.

But only six have so far been listed after the instruction, according to the IDRA. They are Sonali Life Insurance, Desh General Insurance, Express Insurance, Crystal Insurance, Union Insurance, and Sena Kalyan Insurance.

IDRA has also issued show-cause notices to Swadesh Life Insurance and South Asia Insurance for not going public after the finance minister’s instruction.

Besides, the BSEC had rejected Chartered Life Insurance’s IPO proposal for not meeting the securities rules required for listing.

The remaining 17 companies have sought more time from the IDRA to be listed because of the Covid-19 pandemic.

Of the companies, twelve have promised to get listed by 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.

Of them, five have committed to going public by June 2022. They are Sunflower Life Insurance, Zenith Islami Life Insurance, Jamuna Life Insurance, NRB Global Life Insurance, and Diamond Life Insurance.

The IDRA law requires insurance companies to be listed within three years from the date 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 in January 2011.

“We’ll file our IPO proposal within 120 days after submitting the December 2021 financial statement,” Trust Islami Life Insurance CEO Mohammad Gias Uddin told The Business Post.

“Hopefully, we would be listed by 2023.”