IUBAT- International University of Business

Agriculture and Technology

Assignment On
Management of Insurance Business
FIN-404
Topic: About Prime Life Insurance Limited

Prepared by
Moudud Ahmed Mridha-------ID: 12202113
Section B

Prepared for

Zahir rayhan Salim

Faculty of
College of Business Administration
IUBAT
Uttara, Dhaka

Date of Submission: 26 November, 2014

1

Letter of transmittal
26 November 2014
Zahir Rayhan Salim
Faculty
IUBAT
Sector 10, Uttara, Dhaka-1230
Bangladesh.
Subject: Submission of the report on Prime Islami Life Insurance Limited.
Dear Sir,
Here the report that I prepared on Prime Islami Life Insurance Limited. Which
will be mainly, based on the survey of the Prime Islami Life Insurance Ltd as per
your assignment.
In preparing the report, I have made sincere efforts to present the relevant
information pertinent to this report and have analyzed them accordingly.
In this connection may I urge up on the benign honor of yours to go through the
report and let us know about any change and adjustment on the report if required?

Sincerely yours

Moudud Ahmed Mridha

Signature..

Index
Definition of Insurance
2

History of insurance
Origin of insurance
Development Insurance in Bangladesh
Objective
Company name
About Prime Islami Life Insurance Ltd
Corporate status and legal form
Nature of Business
Over view of an Organization
Mission, Vision, Goal
Features
Policies offered
Investment, Risk consideration for changing premium
Claims, Settlement of Claims
Financial Highlights
Business Growth Rate
Improvement of Financial Health
Investment Portfolio
Life Revenue Account
Life Insurance fund

6
8
10
11
12
13
13
13
14
15
16
17
22
23
24
25
26
27
28
31

Outstanding Premium, Risk factors & management

perception about the risks
Conclusion

32
33

DEFINITION OF INSURANCE
Insurance is defined as a cp-operative device spread that loss caused by a particular
risk over a number of persons who are exposed to it and who agree to insure
themselves against that risk. Risk is uncertainty of a financial loss. It should not be
confused with the chance of loss, which is the probable number of losses out of a
given number of exposures. It should not be confused with peril, which is defined
as the cause of loss or with hazard, which is a condition that may increase the
chance of loss. Finally, risk must not be confused with losses itself which is the
unintentional decline in, or disappearance of value arising from a contingency.
Wherever there is uncertainty with respect to a probable loss there is risk. The
famous writers definitions about insurance are below:

Insurance is a promise by an insurer to an insured of protection/or service.

Mowbray and Blanchard.
Insurance may be define as a system of combining many loss exposures, with the
cost of the losses being shared by all of the participants-F.G. Granc.
Insurance is a social device whereby the uncertain risk an individuals may be
combined in a group and thus made more certain, small periodic contributions by
the individuals providing a fund out of which those who suffer losses may
reimbursed-Riegel and miller.

History of insurance
In some sense we can say that insurance appears simultaneously with the
appearance of human society. We know of two types of economies in human
societies: money economies (with markets, money, financial instruments and so
on) and non-money or natural economies (without money, markets, financial
instruments and so on). The second type is a more ancient form than the first. In
such an economy and community, we can see insurance in the form of people
helping each other. For example, if a house burns down, the members of the
community help build a new one. Should the same thing happen to one's neighbor,
the other neighbors must help. Otherwise, neighbors will not receive help in the
future. This type of insurance has survived to the present day in some countries
where modern money economy with its financial instruments is not widespread
(for example countries in the territory of the former Soviet Union).
4

Turning to insurance in the modern sense (i.e., insurance in a modern money

economy, in which insurance is part of the financial sphere), early methods of
transferring or distributing risk were practiced by Chinese and Babylonian traders
as long ago as the 3rd and 2nd millennia BC, respectively. Chinese merchants
traveling treacherous river rapids would redistribute their wares across many
vessels to limit the loss due to any single vessel's capsizing. The Babylonians
developed a system which was recorded in the famous Code of Hammurabi, c.
1750 BC, and practiced by early Mediterranean sailing merchants. If a merchant
received a loan to fund his shipment, he would pay the lender an additional sum in
exchange for the lender's guarantee to cancel the loan should the shipment be
stolen.
Achaemenian monarchs were the first to insure their people and made it official by
registering the insuring process in governmental notary offices. The insurance
tradition was performed each year in Norouz (beginning of the Iranian New Year);
the heads of different ethnic groups as well as others willing to take part, presented
gifts to the monarch. The most important gift was presented during a special
ceremony. When a gift was worth more than 10,000 Derrik (Achaemenian gold
coin) the issue was registered in a special office. This was advantageous to those
who presented such special gifts. For others, the presents were fairly assessed by
the confidants of the court. Then the assessment was registered in special offices.
The purpose of registering was that whenever the person who presented the gift
registered by the court was in trouble, the monarch and the court would help him.
Jahez, a historian and writer, writes in one of his books on ancient Iran:
"[W]henever

The owner of the present is in trouble or wants to construct a building, set up a

feast, have his children married, etc. the one in charge of this in the court would
check the registration. If the registered amount exceeded 10,000 Derrik, he or she
would receive an amount of twice as much."
A thousand years later, the inhabitants of Rhodes invented the concept of the
'general average'. Merchants whose goods were being shipped together would pay
a proportionally divided premium which would be used to reimburse any merchant
whose goods were jettisoned during storm or sink age.
The Greeks and Romans introduced the origins of health and life insurance c. 600
AD when they organized guilds called "benevolent societies" which cared for the
families and paid funeral expenses of members upon death. Guilds in the middle
5

Ages served a similar purpose. The Talmud deals with several aspects of insuring
goods. Before insurance was established in the late 17th century, "friendly
societies" existed in England, in which people donated amounts of money to a
general sum that could be used for emergencies.
Separate insurance contracts (i.e., insurance policies not bundled with loans or
other kinds of contracts) were invented in Genoa in the 14th century, as were
insurance pools backed by pledges of landed estates. These new insurance
contracts allowed insurance to be separated from investment, a separation of roles
that first proved useful in marine insurance. Insurance became far more
sophisticated in post-Renaissance Europe, and specialized varieties developed.
Toward the end of the seventeenth century, London's growing importance as a
centre for trade increased demand for marine insurance. In the late 1680s, Mr.
Edward Lloyd opened a coffee house that became a popular haunt of ship owners,
merchants, and ships captains, and thereby a reliable source of the latest shipping
news. It became the meeting place for parties wishing to insure cargoes and ships,
and those willing to underwrite such ventures. Today, Lloyd's of London remains
the leading market (note that it is not an insurance company) for marine and other
specialist types of insurance, but it works rather differently than the more familiar
kinds of insurance.
Insurance as we know it today can be traced to the Great Fire of London, which in
1666 devoured 13,200 houses. In the aftermath of this disaster, Nicholas Barbon

opened an office to insure buildings. In 1680, he established England's first fire

insurance company, "The Fire Office," to insure brick and frame homes The first
insurance company in the United States underwrote fire insurance and was formed
in Charles Town (modern-day Charleston), South Carolina, in 1732.
Benjamin Franklin helped to popularize and make standard the practice of
insurance, particularly against fire in the form of perpetual insurance. In 1752, he
founded the Philadelphia Contribution ship for the Insurance of Houses from Loss
by Fire. Franklin's company was the first to make contributions toward fire
prevention. Not only did his company warn against certain fire hazards, it refused
to insure certain buildings where the risk of fire was too great, such as all wooden
houses.
6

In the United States, regulation of the insurance industry is highly Balkanized, with primary
responsibility assumed by individual state insurance departments. Whereas insurance markets
have become centralized nationally and internationally, state insurance commissioners opera0te
individually, though at times in concert through a national insurance commissioners'
organization. In recent years, some have called for a dual state and federal regulatory system
for insurance similar to that which oversees state banks and national banks.

ORIGIN OF INSURANCE
The concept of such a philosophy of grouping to gather or risk sharing developed
in every ancient time. We are probably go back to 4 th century, which witnessed the
practice of BOTTOMRY BONDS and RESPONDENTIA BONDS in maritime
trade. If at a time distress in mid ocean, the master of the vessel used to be need of
fund/money for completion of journey, but could not manage the same at an
intermediary port either on his account or on the account of the owner of the
vessel; master was empowered to raise such fund by pledging the vessel. Such a
system was known as Bottomry Bonds, as the loan was used to be given by signing
bond. The term of the agreement was that the loan was required to repay only if the
ship reached destination safe and sound. In case total loss of the ship, nothing was
required to be repaid. It was quite obvious, therefore, that the creditors used to
charge a premium, in addition to interest, to protect themselves against the
possibility of total losses when they lose the principal amount. Similar loans could
also be raised on pledge of cargo and this was used to be done on Respondentia
Bonds. The terms
of repayment were exactly the same. The practice has been abandoned since 19 th
century because of tremendous advancement in communication system.
Another practice, which is still in existence, is known as GENERAL AVERAGE,
which has in itself the element of sharing the loss of one by all. It is a very old
custom and can be traced back to916 B.C. during the time of Rhodians. In
maritime adventure it is probable that the ship a long with cargo and other interest
is in great distress ocean and it may be required of the master of the vessel to take a
bold decision on the spot aiming at the safety of the venture. Such as action may
involve incurring of expenditure or sacrifice. For example, throwing overboard of
the cargo to lighten the vessel.

Up to 18th century we also experience, amongst the merchant community, a system

to sharing risks with each other. They used to form a group where in one of the
merchant, in particular voyage, used to accept the risk against a premium from
others whilst the others used to trade. On the different occasion another from the
group used accept the risk whilst the rest used to trade, and so on. So at one time
had to take the responsibility of risk bearing and collection was such, which could
reasonably take, caring of probable loss. As the group was indeed small and the
professional expertise on risk management was rather varying limited, the rate of
premium used to be necessary high. Here also it is necessary for the student to
appreciate that, even through, this is not the present day system of insurance as an
isolated specialized entity, but nevertheless, that concept of insurance, that is to
say, a system of sharing or spreading risk gradually developed because of need,
which was ultimately replaced by modern insurance approach.

DEVELOPMENT INSURANCE IN BANGLADESH

Insurance is not a new idea or proposition to the people of Bangladesh. About half
a century back, during the British rule in the then India, some insurance companies
started transacting insurance business, particularly life, in this part of the world.
Since 1947 until 1971 insurance business gained momentum in this part of what
then known as East Pakistan. There were about 49 companies transacting both life
and general insurance business.
With the emergence of the Peoples Republic of Bangladesh, the government, in
order to make available the future of liberation to the general mass, nationalized
the insurance industry 1972 by Presidential Order No.95, more specifically in
known as the Bangladesh Insurance (Nationalization) Order, 1972. By virtue of
this order, save and except postal life insurance and foreign life insurance
8

companies, all companies and organization transacting all types of insurance

business in this country came under this nationalization. Five insurance
corporations ware basically established,
1.
2.
3.
4.
5.

Jatiya Bima Corporation,

Teesta Bima Corporation,
Karnaphuli Bima Corporation,
Rupsa Bima Corporations,
Surma Bima Corporations,

The Jatiya Bima Corporation was not an underwriting corporation, instead, it was a
central corporation to supervise and control the activities of remaining four
subsidiary corporations responsible for underwriting. As per this order Teesta and
Karnaphuli were made responsible for general insurance business and Rupsa and
Surma were made responsible for life insurance business. All the existing 49
companies were merged with these 4 corporations. Whilst life companies or the
life portion of a composite company joined the Rupsa and Surma, the general
companies of general portion of composite company joined the Teesta and
Karnaphuli.

Objective
As the requirement of this course, the students are mandated to prepare a report
upon which the faculty evaluates and provides the grade. Our honorable faculty
provides us a guideline for preparing this term paper. The students followed this
online in a very strict manner. The introductory part of the report includes the vary
primary concepts of life insurance policy its meaning and backgrounds. It also
features the life insurance policy in the Bangladesh prospective.
9

The scenario of insurance policy in Bangladesh has focused from different point of
view. After a general look, I concentrated on general features of life insurance, its
needs, its recent developments and its activities and related other issues. Finally,
the report focuses on PRIME ISLAMI LIFE INSURANCE LIMITED. Its
background, the different policies it offers and some special offers it has under its
product banner.

Prime Islami Life Insurance Limited

About Prime Islami Life Insurance Ltd
Prime Islami Life Insurance Ltd. was incorporated as prime life insurance
company ltd. In july 2000 with combined efforts of renowned business
Personalities, Bankers and Retired Secretary, Govt. of Bangladesh. With a view to
10

running the company as per ideology and principle of shariah, it was converted
into Prime Islami Life Insurance Limited In April 2002. In a relatively very short
span of time, Prime Islami Life Insurance Limited (PILIL) has achieved an
excellent progress in business and product developments.

CORPORATE STATUS AND LEGAL FORM

Prime Islami Life Insurance Ltd, is a public Limited Company incorporated under
Companies Act, 1994 on 24 July 2000 with an authorized Share capital of Tk
100,00,000 divided into 1,000,000 Ordinary Shares of Tk 100/= each of which
300,000 ordinary share of Tk 100/= each were issued and fully paid-up by the
Sponsors /Directors of the company. The Company went for public issue in
November 2006 and its shares are listed in both Dhaka and Chittagong Stock
Exchanges in the Year 2007. The company is engaged in Islami Life Insurance
Business.
The registered office of the Company is situated at Raj Bhaban (6th floor) 29
Dilkusha, C/A Dhaka-1000.
NATURE OF BUSINESS
The Company is mainly engaged in individual, group life including Micro (Mukta
Bima) and P.I.D.P.S (Prime Islami Deposit Pension Scheme).In Case of individual
& group Life insurance (Akok Bima) the risk commences from the issue date of
F.P.R (First Premium Receipt) and in case of Micro Insurance scheme (Mukto
Bima) & PIDPS the risk covers from the date of issue of pass Book. In addition, it
also operates Group Insurance.

Over view of an Organization

11

Address

Company Registration Date

Registration date of the
Company (ONLY LIFE
INSURANCE)

Head Office: Prime Islami Life Insurance Ltd.

Head Office
Raj Bhaban (6th Floor)
29, Dilkusha C/A, Dhaka- 1000. Phone:
9560889,9562512, 01711-920787
Fax +880-2-9566923
E-mail: plicl@bdonline.com,www.primeinsu.com

2000

2002

Raj Bhaban (6th floor )

29, Dilkusha C/A, Dhaka-1000
Phone: 9560889, 9554538

Number of Branch

82 (Eighty Two)

Number of Director

12 (Twelve)

Auditor

Company Registration Date

Registration date of the
Company (COVERTED
ISLAMI LIFE INSURANCE)
Registered Office

Management & Financial

Consultant

Law Adviser

M.M Rahaman & co.

Chartered Accountants
54 Dilkusha C/A, Dhaka -1000
Phone:9561553
M. Azizul Haque
Former Inspector General of Police.
Ex Advisor of Caretaker Government of Peoples
Republic of Bangladesh

Rokonuddin Mahammud
Bar-at-law

Mission
12

 To abide by shariah Principles in say-to-day business affairs.

To build dynamic, sound and professional management team.
To develop innovative products to add value to our customers
To ensure quality management system.
To ensure best customer services
To ensure good governance

Vision
To maintain utmost integrity responsibility and transparency
To become the best the private life insurance company in Bangladesh and in
South-East Asia as whole.
To change beliefs, attitudes, values and practices in the Islamic life insurance
industry.

Goal
To sere the humanity for its well-being in the present and the world hereafter by
providing financial and moral gains through utmost good faith, good conduct,
mutual trust, sincerity, integrity, and personalized services.

13

Features
The following underlying assumption, measurement base, rules, regulations and
accounting pronouncement have been considered in and presenting the financial
statements:
Going concern
Accrual unless stated otherwise
Historical cost convention
The Insurance Act 1938
The companies Act 1994
The Securities and Exchange (SE) Rule, 1987
The Income Tax ordinance, 1984
The Listing Regulation of Dhaka and Chittagong Stock Exchange and
The Bangladesh Accounting Standards (BAS)
1,2,7,8,10,14,16,18,24,25,26,28,30 & 37 which have been adopted the
Insurance of Chartered Accountants of Bangladesh (ICAB).

14

Policies Offered

01. Islamic Endowment Assurance Plan (Hajj Bima)

Age at Entry
: 18 to 50 Years
Term
: 10, 15 & 20
Mode of
: Yearly, Half Yearly & Quarterly
Payment
Maturity Age
: 70 Years
Supplementary
: DIAB - Double Indemnity Accidental Benefit
PDAB - Permanent Disability Accidental Benefit
Benefits
: Under this plan the sum assured is payable on death if
occurring earlier or on survival of life assured till end of
term.

15

02. Assurance Cum Pension and Medical Benefit Plan

Age at Entry
: 18 to 50 Years
Term
: 5-42
Mode of Payment : Yearly, Half Yearly & Quarterly
Maturity Age
: 60 Years
Supplementary
: Na
Benefits
: On death of Assured pensioner occurring before date of
maturity, 10 (ten) times of yearly pension is payable, or on
survival of assured pensioner benefit will be paid in quarterly
installments for ten years and thereafter as long as he lives.

16

03. Three Payment Endowment Assurance Plan

Age at Entry
: 18 to 50 Years
Term
: 12, 15, 18, 21 & 24
Mode of Payment : Yearly, Half Yearly & Quarterly
Maturity Age
: 70 Years
Supplementary
: DIAB, PDAB, HI
Benefits
: 25% of sum assured will be paid on completion of one-third
of term. Another 25% of sum assured will be paid on
completion of two-third of term and at the end of term
remaining 50% of basic sum with profits will be paid. Even
after payment of 2nd installment the full sum assured is
payable if death occurs before maturity.

05. Five Payment Endowment Assurance Plan

Age at Entry
: 18 to 50 Years
Term
: 10, 15, 20, 25, & 30
Mode of Payment : Yearly, Half Yearly & Quarterly
Maturity Age
: 50 Years
Supplementary
: DIAB, PDAB, HI
Benefits
: Under this plan benefit schedule is below:
10% of Sum Assured is payable of 15 of term
15% of Sum Assured is payable of 25 of term
20% of Sum Assured is payable of 35 of term
25% of Sum Assured is payable of 45 of term
The rest of 30% of sum assured with profit is payable at the
end of term. Even after payment of 4th installment the full
sum assured with profits is payable if the death occurs before
maturity.

04. Prime Islami Deposit Pension Scheme

Age at Entry
: 18 to 50 Years
Term
: 10 & 15
Mode of Payment : Yearly, Half Yearly & Quarterly
Maturity Age
: 50 Years
Supplementary
: na
17

Benefits

: Under this plan the sum assured is payable on normal death

and double of the sum assured is payable on accidental death
or after expiry of the term sum assured with profits (if any) is
payable.
06. Group Term Life Assurance Plan
Age at Entry
: 20 to 65 Years
Term
: 01 year
Mode of Payment : Yearly
Maturity Age
: 60 Years
Supplementary
: DIAB, PDAB, HI & PPD
Benefits
: The Group Term Life Insurance Scheme covers the risk of
death of an employee while is service on death during the
contract period the sum assured is payable. Initially the
contract is for a period of three years where the premiums are
payable annually in advance an thereafter the contract may be
renewed for further period(s).

18

07. Group Endowment Assurance Plan

Age at Entry
: 20 to 59 Years
Term
: 01 - 42
Mode of Payment : Yearly
Maturity Age
: 60 Years
Supplementary
: DIAB, PDAB, HI
Benefits
: The Scheme provides for payment of full sum assured at the
death of an employee while in service or in case of survival of
retirement age at 60 years the employee will be entitled to
100%, 50% or 25% of the sum assured according to contract.

08. Multiple Benefits Life Assurance Plan

Age at Entry
: 20 to 55 Years
Term
: 10, 20, 30 & 40
Mode of Payment : Yearly, Half Yearly & Quarterly
Maturity Age
: 65 Years
Supplementary
: na
Benefits
: Premium is payable half of the term of the policy.
Fulfill the half term of the policy the sum assured is payable
and also the sum assured is payable at the end of the specified
term. At the event on death at any time of term two multiple
of sum assured (for normal death) & three multiple of sum
assured (for accidental death) is payable.

19

09. Child Protection Assurance Plan

Age at Entry
: 20 to 55 Years
Term
: 10 - 30
Mode of Payment : Yearly, Half Yearly & Quarterly
Maturity Age
: 65 Years
Supplementary
: na
Benefits
: In the event of death of the payor in continue the policy,
premiums are not payable for remaining period(s).
Also 1% (one percent) of sum assured is payable (as
annuity) to the Child and at the end of the term total
sum assured with profits is payable. In the event of
death of the Child assured within the term, the payor
shall get full sum assured as per schedule below:
25% of sum assured on completion of policy term not
more than 6 months.
50% of sum assured on completion of policy term more
than 6 months but not more than 12 months.
75% of sum assured on completion of policy term more
than 1 (one) year but not more than 2 (two) years.
100% of (full) sum assured on completion of policy
term above 2 years.

10. Premium Back Term Assurance Plan

Age at Entry
: 20 to 55 Years
Term
: 10, 15 & 20
Mode of Payment : Yearly, Half Yearly & Quarterly
Maturity Age
: 65 Years
Supplementary
: na
Benefits
: Under this plan the sum assured is payable on death of the
assured before date of maturity or on survival annual
premium multiplied by the policy term will be refunded.

20

12. Couple/Dampati Assurance Plan

Age at Entry
: 18 to 50 (Female) & 21 - 50 (Male) Years
Term
: 10, 12, 14, 16, 18, 20, 22 & 24
Mode of Payment : Yearly, Half Yearly, Quarterly & Monthly
Maturity Age
: 60 Years
Supplementary
: na
Benefits
: Under this plan sum assured is payable on survival of wife till
end of term, or on death if occurring earlier and also sum
assured is payable on death of husband, if occurring within
the term of policy.

21

11. Single payment Endowment Assurance Plan

Age at Entry
: 18 to 50 Years
Term
: 10 & 15
Mode of Payment : One Time
Maturity Age
: 60 Years
Supplementary
: NIL
Benefits
: Under this plan double of the sum assured is payable on
survival of the assured till end of term, or on death if
occurring earlier.

Investment
Investments are stated in the account at their cost of acquisition is accounted for on
accrual basis. Dividend income and entitlement to entitlement to Bonus share are
recognized when right to receive such dividend and bonus share is established.

Risk consideration for changing premium

Interest rate risks
Volatility of money market, which ultimately imposes upward pressure on interest
rate structure, may erode organization profitability.
Exchange rate risks
Devaluation of local currency against major international currencies affects
business performance of import based companies or companies borrowing in
foreign currency affects adversely.
Industry risks
The Company is operating in a highly competitive industry. Entrance of competitor
in the business arena may hamper business
growth of the company
Market and technology-related risks
To be competitive in the market Insurance companies always need to develop new
products and services as well as to introduce new
insurance policies. Failing of which may make the Company out performed by its
competitors.
22

Potential or existing government regulations

As an insurance company, Prime Islami life Insurance Limited is directly regulated
by the Chief Controller of Insurance. Any
unfavorable change in regulations may affect the Company's business.
Potential changes in global or national policies
Unfavorable change in global and national policies will affect companys business
operation.
Operations risks
Liberalization of permission to set up more insurance companies by government
may result in severe competition amongst insurers thus reducing premium and
profitability.

Claims
Clams are policy benefit payable according to the terms of policy contract. Claims
by survivals are recorded when these become due for payment. Death claims are
accounted for when intimated.
Provision for outstanding death claims less any reinsurance thereof is made for
those policies where the intimation of death has been received up to 31st December,
2006

Settlement of Claims
You will agree with me that reputation, image of the Company largely depend on
early settlement of claims. Our Company is very much sincere and prompt to settle
the Claims Company is very much sincere and prompt to settle the claims. During
2006, 101 death claims were settled and 3103 survival benefits were paid
amounting to TK 36.00 lac and Tk 2.57 crore respectively, being 5.20% of total
premium procured during the year.

23

Financial Highlights
Business Performance
SL.NO

Particulars

2006

2005

2004

2003

2002

01

Gross
premium

56.37

34.30

18.29

13.02

5.95

First Year
Premium

32.22

21.09

11.41

9.87

5.56

Renewal
Premium

24.05

13.16

6.79

3.12

0.38

Group
Premium

0.10

0.05

0.09

0.03

0.01

02

Assts

*192.37

27.11

13.69

7.41

5.21

03

Life Fund

43.86

21.23

9.27

2.83

0.09

24

04

Investment

33.34

15.58

6.65

1.90

1.90

05

Investment
Income 3.25

3.25

0.95

0.35

0.20

0.24

06

Claims

2.93

1.51

0.28

0.11

0.002

07

Claims to
Premium (%)

5.20

4.40

1.53

0.84

0.03

08

Management
Exp.

32.50

21.01

11.38

9.96

5.75

a. Commission 23.10

14.96

7.29

6.69

3.50

b. Admin

9.40

6.05

4.09

3.27

2.25

Management
Exp. To
Premium
income (%)

57.65

61.25

62.21

76.50

96.64

09

Business Growth Rate

2006

2005

2004

2003

2002

Premium 64.34
(in %)

87.53

40.48

118.82

193.10

Assets

98.03

84.75

42.22

33.24

25

*609.63

(in %)
Life
Fund (in
%)

26

106.59

129.02

227.56

30044.44 36.37

Improvement of Financial Health

The company has been able to make a significant growth during its 06(six) years of
life and a comparative financial statement of last two years is given below:

(Taka in crore)
Description

2005

2006

Growth Rate

Life Fund

Tk 21023

Tk 43.86

106.59%

Investment

Tk 15.59

Tk 33.34

113.86%

Total Assets

Tk 27.11

Tk 1925.38

609.63%

Investment
Income

Tk 0.95

Tk 3.25

242.00%

27

Investment Portfolio
(Taka in crore)
Description

2005

2006

Islami Bond

Tk 4.60

Tk 7.15

Mudarabah Term
Deposit

Tk 10.81

Tk 25.67

Shares

Tk 0.18

Tk 0.52

The above statement speaks that the company has been getting a sound financial
footing gradually.

28

Life Revenue Account

For the year ended December 31, 2006
Amount in Taka
Notes

2006

2005

BALANCE OF FUND AT THE BEGINNING OF

THE YEAR

212,269,127 92,662,097

ADJUSTMENTS MADE DURING THE YEAR

845,480

PREMIUM LESS REINSURANCE

616,333

19
322,174,725 210,917,439

First Year Premium

322,174,725 21,917,439
Renewal Premium

240,475,960 131,621,880
240,475,960 131,621,880

Group Insurance Premium

1,000,881

495,744

Gross Premium

56,651,566

343,035,063

Reinsurance Premium

(1,322,778)

(129,351)

Net Premium

562,328,788 342,905,712

PROFIT, DIVIDENDS AND RENTS

20

32,465,431

9,549,966

OTHER INCOME

21

319,440

161,253

Total

806,537,306 444,662,695

29

First year Premium , where the maximum

Premium Paying period is
Two years
Three years
Four years
Five years
Six years
Seven years
Eight years
Nine years
Ten years

254,229,043

160,737,919

Eleven years

28,821

29,989

Twelve years or (including though out life )

67,916,861

50,149,531

322,174,725 210,917,439

30

Life Revenue Account Continued

CLAMS UNDER POLICIES (INCLUDING PROVISION

FOR CLAIMS DUE OR INTIMATED ), LESS
REINSURANCE

2006

2005

By Death

3,644,887

2,099,434

By Survival

25,181,547

12,738,773

By Others (Disability Claim)

14,554

60,000

By Surrenders

421,000

119,927

29,261,988

15,018,134

5,244

47,653

Profit Commission

31

Life Insurance fund

This consists of the accumulated balance of life insurance Fund up to December
31, 2006.The break-up as under
Balance as on January

212,269,127

92,662,097

Add: increase in Life Revenue Account during the year

226,374,280

119,607,030

Balance as on December 31

438,643,407

212,269,127

2006

2005

ESTIMATED LIABILITIES IN RESPECT OF

OUTSTANDING CLAIMS, WHETHER DUE OR INTIMATED 952,931

294,903

Death claim

350,000

240,654

Claim on Survival

602,931

54,249

AMOUUNT DUE TO OTHER PERSONS OR BODIES

2006

2005

CARRYING ON INSURANCE BUSINESS

1,711,554

833,332

1,118,437
593,117

240,215
593,117

1,711,554

833,332

2006

2005

6, 626, 13

10,111,723

1st Year Premium

4,450,791

3,860,536

Renewal Premium

2,175,342

6,251,187

Total

6,626,133

10,111,723

1. Asean Re Takaful International (L) Ltd

2. Jiban Bima Corporation

PREMIUM DEPOSIT

32

Outstanding Premium
The above balance represents outstanding amount of premium due on 31st
December 2006 but subsequently collected.

Risk factors & management perception about the risks

Interest rate risks
Volatility of money market, which ultimately imposes upward pressure on interest
rate structure, may erode organization profitability.

Exchange rate risk

Devaluation of local currency major international currencies affects business
performance of import based companies or companies borrowing in foreign
adversely.

Industry risks
The company is operating in a highly competitive industry. Entrance of competitor
in the business arena may hamper business growth of the company.

Market perception:
To be company in the market Insurance companies always need to develop new
product and services as to introduce new insurance policies. Failing of which may
make the company by its competitors.

Potential or existing government regulation:

As an insurance company, prime Islami life Insurance Limited is directly regulated
by the chief controller of Insurance. Any unfavorable change in regulations may
affect the companys business.
33

Potential changes in global or national policies

Unfavorable change in global and national policies will affect companys business
operation.

Operation risks:
Liberalization of permission to set up more insurance companies by government
may result in severe competition among insurers thus reducing premium and
profitability.

34

Conclusion
Bangladesh is also going ahead to complete business world. The Life insurance has
an important role in every economy. The insurance company can use the premium
amount for the expanding of business. The life insurance company ensure relive a
persons loss against the death or disability. A person is a family, a society, a
county. By ensuring ones future the life insurance contribute to the Total County.
Bangladesh can rapidly expand insurance benefit for people if the people become
more educated. Thus as one of the oldest insurance companies in he county Prime
Islami Life can create a higher level of awareness and thereby capitalize on this
Life Insurance market.

35

BIBLIOGRAPHY
1. Website: http://www.primeislamilife.com
2. Annual reports of Prime Islami Life Insurance Limited, 2006.

36