2018-06-23 11:04:57 BdST
Insurers' life fund declines 6.0pc in ‘17
The "life fund" of all the 32 life insurers shrank by nearly 6.0 per cent in calendar year 2017, revealed a report.
The financial institutions division under the finance ministry prepared the report.
A life fund is a portfolio which can be made up of stocks, bonds, cash and alternatives.
A policyholder's life assurance premiums are deposited in it and claims are paid out of it.
Life fund usually grows fast as it is comprised of all the earnings, deducting management expenses.
However, the total life fund as of last December stood at Tk 278.54 billion, down by 5.61 per cent than that of 2016, the documents showed.
Industry insiders attributed this to lesser inflow of earnings than higher outflow in the year under review.
The fund's returns from investment also dropped, resulting in a fall in the overall growth of the endowment, they said.
Some top executives of life insurance companies told that many insurers received a large number of maturity claims in 2017.
Many third-generation life firms that started business sometime in 2000 also received maturity claims of their initial policies in the year under review.
AKM Shariful Islam, chief executive officer of Sun Life Insurance Company, said there were quite a large number of maturity claims in 2017.
Most of the policies belonging to the third generation companies matured in the year, he added.
"Our investment returns also dropped significantly," Mr Islam said.
The insiders say they usually invest in government treasury bonds and term deposit instruments.
The yield of the bonds and the rate of interest offered to term deposits in the banking system have been comparatively low in recent years.
These factors are contributing to the poor growth of the life fund.
MM Monirul Alam, managing director of Guardian Life Insurance Company, said a drop in the life fund means higher cash outflows than inflows.
The fund should be expanded fast. After deducting all expenses, the earnings go to life fund, he said.
Unauthorized use or reproduction of The Finance Today content for commercial purposes is strictly prohibited.