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Prime Islami Life Sells Assets to Settle Tk 3.17B Claims

Industry: Financial, Insurance
Company: Prime Islami Life Insurance
Company Intelligence Tag: Business Insights

Prime Islami Life Insurance is set to sell properties, including a 36.12-decimal land and a building in Banglamotor, to address the challenge of meeting policyholders’ claims due to a liquidity crunch. The decision, guided by the Insurance Development and Regulatory Authority (IDRA), comes as the company grapples with unsettled insurance claims totaling Tk 3.17 billion as of December 2022, with future claims expected to amount to Tk 21 billion over the next five years. In response, the company aims to expedite claim settlements by liquidating assets. This move is in line with IDRA’s focus on timely claim resolution, particularly as several life insurance firms encounter difficulties in fulfilling claims due to poor investments and liquidity issues. IDRA’s recent appointment of observers to certain insurance companies underscores the regulatory urgency in addressing these challenges.

The decision to sell assets follows revelations of financial misconduct within Prime Islami Life Insurance, where some directors diverted over Tk 3 billion through unauthorized use of fixed deposits as loan collateral for another company, PFI Securities. Auditors identified lapses in risk assessment and compliance, contributing to the mismanagement of funds. The company’s investments in various concerns, including those of Sterling Group and Banglalion Zero Coupon Bonds, have raised doubts about recovery, exacerbating its financial predicament. With its life fund declining by nearly 2% year-on-year to Tk 7.13 billion in the nine months through September 2022, and the stock witnessing a 1.66% drop to close at Tk 59.20, the insurer’s challenges highlight broader issues faced by certain players in the life insurance sector.

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