Protective Islami Life Insurance files for Tk15 crore IPO

Protective Islami Life Insurance Ltd wants to raise Tk15 crore from the capital market through an initial public offering (IPO) under the fixed price method.

The company will issue 1.5 crore ordinary shares with a face value of Tk10 apiece. ICB Capital Management Limited is working as the issue manager for the company's IPO.

The life insurer has recently submitted its IPO application to the Bangladesh Securities and Exchange Commission (BSEC) along with its prospectus and other relevant documents.

Protective Islami Life Insurance was established in 2013. It mainly provides individual life insurance, pensions, and group life and health insurance. 

As per rules, a company should be listed within three years of establishment. But the company has now decided to be more compliant with regulations and apply for an IPO ten years after establishment.

The IPO plan

The company said in its IPO prospectus that of the Tk15 crore, it will invest Tk13.95 crore in the capital market, including government treasury bonds and fixed deposit receipts.

Also, it will issue 22.5 lakh ordinary shares to its employees, which the BSEC has already approved. These shares will be locked in as per the public issue rules by the commission.

Seeking anonymity, a senior official at the company said Protective Islami Life wants to raise funds for being more compliant with regulatory requirements.

"When a company gets listed in the stock market, it obtains customers' trust which helps business growth."

"The company has been doing good business in the group insurance segment, and a high portion of the life fund comes from this segment. But since the Covid-19 pandemic, it has also done good business in the health insurance segment," he added.

Financial performance

According to the prospectus, at the end of 2022, the life insurance fund of the company rose 76% to Tk11.64 crore, from Tk6.61 crore in 2021.

The total assets of the company grew to Tk37.53 crore, from Tk29.53 crore in the previous year, while liabilities have come down 31% to Tk3.39 crore in 2022.

Its net premium has increased to Tk46.71 crore, from Tk40.64 crore in the previous year.

At the end of 2022, the company has settled Tk24 crore claims, up from Tk23.36 crore in 2021.

Industry insights

Some life insurers are making impressive performance and achieving customers' trust in the industry. But around ten life insurance companies are at risk, and may struggle to survive within the next two to four years due to bad investments made using funds collected from policyholders, said industry insiders.

They said outdated policy is the main reason behind the decline in the country's insurance penetration. About 60% of the policies taken in life insurance are outdated. Customers are discontinuing in one or two years after taking policies.

This is mainly because of the field workers who do not explain the process properly to customers. They tend to entice customers, not enlighten them. When the customers realise such policies are not valid, they discontinue.