Insurers may get SEC waiver

Five insurance companies, which have applied for initial public offerings (IPO), may be exempted from having the minimum paid-up capital required by new laws.
The Securities and Exchange Commission (SEC) has recently sent these companies' IPO applications to the finance ministry for consideration.
The Bangladesh Insurance Association (BIA), which represents insurance companies, recommended the move, saying that the new laws are not yet implemented, so the companies should be allowed to have an IPO with their existing paid-up capital capacities.
The companies are Bangladesh National Insurance, Desh General Insurance, Meghna Insurance, Padma Life Insurance and Sunflower Life Insurance.
As per the new laws -- Insurance Development and Regulatory Authority Act 2010 and Insurance Act 2010, passed in March this year -- companies both life and non-life (general) have to increase their paid-up capital.
The amount of paid-up capital for a general insurance company was raised over 166 percent to Tk 40 crore from Tk 15 crore, and for a life insurance company, it was raised by 300 percent to Tk 30 crore from Tk 7.5 crore.
According to the SEC, Bangladesh National Insurance applied to raise Tk 13 crore by IPO, Desh General Insurance, Meghna Insurance and Sunflower Life Insurance Tk 9 crore each and Padma Life Insurance Tk 11 crore.
“We've sent the IPO proposals of these companies to the ministry of finance. These companies will be exempted from the paid-up capital requirement after the finance ministry's nod,” an SEC member told The Daily Star Tuesday.
AKM Rafiqul Islam, president of BIA, said he has recommended these companies' IPO proposals.
Nasir A Chowdhury, managing director of Green Delta, a leading general insurance company in the country, also supports the IPO move of the five companies.
The insurance industry plays a vital role in Bangladesh's capital market, which has a scarcity of securities. Currently, the insurance sector tops the securities list with 44 companies in the country's two bourses followed by banks 30 and mutual funds 26.
Although 171 government treasuries are listed in the market, not a single one is traded.
Investors believe the listing of five insurance companies would help cushion the bubble market.
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