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Padma Islamic Life Insurance on the verge of closure

Staff Correspondent

As of December 31 last year, Padma Islami Life Insurance Company Limited had outstanding insurance claims of about Tk 248 crore. The company, which was listed on the capital market until the time in question, also had a large deficit in its life insurance fund. The auditor has expressed concerns about whether the company will be able to properly manage its operations in the future in such a situation.

The auditor expressed this concern through the Dhaka Stock Exchange (DSE) on Sunday.

The concerned customers alleged that Padma Islami Life Insurance could be closed at any time.

According to the information provided by the auditor, as of December 31, Padma Islami Life had outstanding insurance claims of Tk 247 crore 95 lakh 35 thousand 535. Although the company has a provision to pay this insurance claim within 90 days as per Section 72 of the Insurance Act 2010, it has not done so. The company has not even formed any provision or reserve for interest against this huge unpaid insurance claim.

The auditor further said that the deficit in the company’s life insurance fund stood at Tk 291 crore 92 lakh 24 thousand 627 at the end of December last year. This means that the company is losing its ability to pay insurance claims.

Meanwhile, the company has invested Tk 2 crore 1 lakh in Al-Manar Hospital. However, the company did not get any profit from that hospital last year. Even the company has not formed any reserve against the possible loss of that investment.

According to the summary of the latest financial report for the second quarter (April-June) of this year, the deficit in the life insurance fund of Padma Islami Life has increased further. At the end of June 30, the fund deficit stood at Tk 307 crore 71 lakh 40 thousand. The company’s deficit has increased by 351.38 million taka in the last one year. At the end of June last year, the fund deficit was 272.57 million taka.

The board of Padma Islami Life Insurance did not recommend any dividend for investors in the 2024 financial year ending on December 31. An annual general meeting (AGM) has been called at the company’s head office on September 25 at 9 am to seek investor approval on the declared dividend and other agenda. The record date in this regard was August 21. The company did not pay any dividend to investors in the 2023 financial year either.

Padma Life paid a 20 percent cash dividend to shareholders in the last 2016 financial year. Out of the company’s total 38.88 million shares, 50.10 percent is held by general investors. That is, considering the risk, the risk to general investors of the company is higher.