Prime Islami Life Insurance facing difficulty to recover Tk203 crore investment
The investments have been outstanding for a long period and the financial conditions of the companies are deficient
Investment highlights:
- Tk183 crore in PFI Securities
- Tk15 crore in 4 entities of Sterling Group
- Tk5 crore in Banglalion zero-coupon bond
- Prime Islami Life started taking legal actions against the companies
- IDRA will take actions against the insurer for making unsecured investments
Prime Islami Life Insurance has been dealing with difficulties in recovering its investment of Tk203 crore in several companies, including a lion's share in PFI Securities Ltd.
The auditor of the insurer, Syful Shamsul Alam and Co, expressed doubts on Sunday at the Dhaka Stock Exchange (DSE) website over the recovery of loans disbursed to PFI Securities Limited, Sterling Group and Banglalion.
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Earlier in 2016, Prime Islami Life had invested Tk183 crore to PFI Securities for a short period, according to the auditor's qualified opinion in the insurer's financial statements.
A senior officer of Prime Life said, "This money was given to PFI Securities for investing in the capital market. But the company did not return the money. So, we filed a case against PFI Securities to recover the money."
The investment has been outstanding for a long time and the financial condition of PFI Securities is also not up to the mark. Hence, the recoverability of the money is uncertain, the auditor further stated in its opinion.
PFI Securities is a subsidiary company of Prime Finance and Investment Limited - a non-bank financial institution.
Earlier, the Bangladesh Securities and Exchange Commission (BSEC) fined PFI Securities for its irregularities.
Prime Islami Life Insurance had also invested Tk15 crore in four concerns of the Sterling Group.
This investment was also outstanding for a long time and there was no form of agreement between Prime Islami Life and the four entities of the group.
The insurer has started to take legal action in order to recover the investment from Sterling Group, the same officer of Prime Islami Life said.
Siddiqur Rahman, the former president of BGMEA is the chairman of Sterling Group.
The publicly listed insurer had also invested Tk5 crore in a Banglalion zero-coupon bond. But the recovery of the amount is unlikely for reasons identical to PFI Securities.
Prime Islami Life has initiated an arbitration process to recover the investment and profit from Banglalion, the insurance company official said.
An equity researcher of a merchant bank said that life insurance companies do business with public money. So, they need to be very careful while making any investment.
A senior officer of Insurance Development and Regulatory Authority (IDRA) told The Business Standard, "We will take proper action against Prime Islami Life Insurance as it made unsecured investments without any approval."
Prime Islami Life Insurance was listed with the DSE in 2007.
The company recommended a 10% cash dividend to its shareholders for the 2019 financial year.
During the first half of this year, its life revenue account decreased by Tk60.82 crore to stand at Tk821 crore.
The closing price of each share of the company was Tk56.50 at the DSE on Sunday.
Sponsors and directors of the company jointly hold 38.08% shares, institutional investors 39.22%, foreign investors 0.17% and the general investors hold 22.53% shares.
