prime life insurance limited

8/9/2019 Prime Life Insurance Limited

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Assignment On

Principles of Insurance

FIN-203

Topic:about Prime Life Insurance Limited

Prepared for

Nusrat Nargis(NN)

Lecturer

Department of Business & Economics

Daffodil International University

Dhanmondi, Dhaka

Date of Submission

27 April 2008

Daffodil International University

102 Sukrabad,Dhanmondi Dhaka 1207

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Prepared by

Md: Main Uddin Khan PolashID: 043-11-428

Md. Anowarul Islam

Id: 071-11-1517

Md. Ifte Khairul Islam

ID 052-11-929

MD.Anamul Kabir Rayadh

071-11-1673

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13 August 2008

Nusrat Nargis

Lecturer

Faculty of Business & Economics

Daffodil International University,

120, Sukhrabad, Dhanmondi,

Mirpur Road, Dhaka 1207

Bangladesh.

Subject: Submission of the report on Prime Islami Life Insurance Limited.

Dear Madam: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

1.

2.

3.

4.

Index

Definition of Insurance 5

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History of insurance 6

Origin of insurance 8

Development Insurance in Bangladesh 10

Objective 11

Company name 12 About Prime Islami Life Insurance Ltd 13

Corporate status and legal form 13

Nature of Business 13

Over view of an Organization 14

Mission, Vision, Goal 15

Features 16

Policies offered 17

Investment, Risk consideration for changing premium 22

Claims, Settlement of Claims 23

Financial Highlights 24

Business Growth Rate 25

Improvement of Financial Health 26

Investment Portfolio 27

Life Revenue Account 28

Life Insurance fund 31

Outstanding Premium, Risk factors & management

perception about the risks

32

Conclusion 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 agiven 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:

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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 thecommunity 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).

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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 2ndmillennia 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 ofRhodes 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

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http://en.wikipedia.org/wiki/Chinahttp://en.wikipedia.org/wiki/Babyloniahttp://en.wikipedia.org/wiki/3rd_millennium_BChttp://en.wikipedia.org/wiki/2nd_millennium_BChttp://en.wikipedia.org/wiki/Millenniumhttp://en.wikipedia.org/wiki/Code_of_Hammurabihttp://en.wikipedia.org/wiki/Mediterraneanhttp://en.wikipedia.org/wiki/Merchanthttp://en.wikipedia.org/wiki/Rhodeshttp://en.wikipedia.org/wiki/General_averagehttp://en.wikipedia.org/wiki/Ancient_Greecehttp://en.wikipedia.org/wiki/Ancient_Romehttp://en.wikipedia.org/wiki/Familyhttp://en.wikipedia.org/wiki/Funeralhttp://en.wikipedia.org/wiki/Deathhttp://en.wikipedia.org/wiki/Guildhttp://en.wikipedia.org/wiki/Middle_Ageshttp://en.wikipedia.org/wiki/Chinahttp://en.wikipedia.org/wiki/Babyloniahttp://en.wikipedia.org/wiki/3rd_millennium_BChttp://en.wikipedia.org/wiki/2nd_millennium_BChttp://en.wikipedia.org/wiki/Millenniumhttp://en.wikipedia.org/wiki/Code_of_Hammurabihttp://en.wikipedia.org/wiki/Mediterraneanhttp://en.wikipedia.org/wiki/Merchanthttp://en.wikipedia.org/wiki/Rhodeshttp://en.wikipedia.org/wiki/General_averagehttp://en.wikipedia.org/wiki/Ancient_Greecehttp://en.wikipedia.org/wiki/Ancient_Romehttp://en.wikipedia.org/wiki/Familyhttp://en.wikipedia.org/wiki/Funeralhttp://en.wikipedia.org/wiki/Deathhttp://en.wikipedia.org/wiki/Guildhttp://en.wikipedia.org/wiki/Middle_Ages


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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-RenaissanceEurope, 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 ofperpetual 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.

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http://en.wikipedia.org/wiki/Middle_Ageshttp://en.wikipedia.org/wiki/Talmudhttp://en.wikipedia.org/wiki/Good_(economics)http://en.wikipedia.org/wiki/Genoahttp://en.wikipedia.org/wiki/Renaissancehttp://en.wikipedia.org/wiki/Europehttp://en.wikipedia.org/wiki/Lloyd's_of_Londonhttp://en.wikipedia.org/wiki/Great_Fire_of_Londonhttp://en.wikipedia.org/wiki/Nicholas_Barbonhttp://en.wikipedia.org/wiki/United_Stateshttp://en.wikipedia.org/wiki/Charleston,_South_Carolinahttp://en.wikipedia.org/wiki/South_Carolinahttp://en.wikipedia.org/wiki/Benjamin_Franklinhttp://en.wikipedia.org/wiki/Firehttp://en.wikipedia.org/wiki/Perpetual_Insurancehttp://www.contributionship.com/http://www.contributionship.com/http://en.wikipedia.org/wiki/Middle_Ageshttp://en.wikipedia.org/wiki/Talmudhttp://en.wikipedia.org/wiki/Good_(economics)http://en.wikipedia.org/wiki/Genoahttp://en.wikipedia.org/wiki/Renaissancehttp://en.wikipedia.org/wiki/Europehttp://en.wikipedia.org/wiki/Lloyd's_of_Londonhttp://en.wikipedia.org/wiki/Great_Fire_of_Londonhttp://en.wikipedia.org/wiki/Nicholas_Barbonhttp://en.wikipedia.org/wiki/United_Stateshttp://en.wikipedia.org/wiki/Charleston,_South_Carolinahttp://en.wikipedia.org/wiki/South_Carolinahttp://en.wikipedia.org/wiki/Benjamin_Franklinhttp://en.wikipedia.org/wiki/Firehttp://en.wikipedia.org/wiki/Perpetual_Insurancehttp://www.contributionship.com/http://www.contributionship.com/


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In the United States, regulation of the insurance industry is highlyBalkanized, with primary

responsibility assumed by individual state insurance departments. Whereas insurance marketshave 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 systemfor 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 19th

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.

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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 lifeand 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

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companies, all companies and organization transacting all types of insurance

business in this country came under this nationalization. Five insurance

corporations ware basically established, viz,

1. Jatiya Bima Corporation,

2. Teesta Bima Corporation,

3. Karnaphuli Bima Corporation,

4. Rupsa Bima Corporations,

5. 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 49companies 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.

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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

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

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

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About Prime Islami Life Insurance Ltd


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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, italso operates Group Insurance.

Over view of an Organization

Address :

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: [email protected],www.primeinsu.com

Company Registration Date

Registration date of the

Company (ONLY LIFE

: 2000

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INSURANCE)

Company Registration Date

Registration date of the

Company (COVERTED

ISLAMI LIFE INSURANCE)

: 2002

Registered Office :

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 :

M.M Rahaman & co.

Chartered Accountants54 Dilkusha C/A, Dhaka -1000Phone:9561553

Management & Financial

Consultant

:

M. Azizul Haque

Former Inspector General of Police.Ex Advisor of Caretaker Government of Peoples

Republic of Bangladesh

Law Adviser : Rokonuddin Mahammud

Bar-at-law

Mission

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

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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.

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

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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).

Policies Offered

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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




The rest of 30% of sum assured with profit is payable at the

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01. Islamic Endowment Assurance Plan (Hajj Bima)


Term : 10, 15 & 20

Mode of

Payment



Supplementary : DIAB - Double Indemnity Accidental BenefitPDAB - Permanent Disability Accidental Benefit

Benefits : Under this plan the sum assured is payable on death ifoccurring earlier or on survival of life assured till end of

term.

02. Assurance Cum Pension and Medical Benefit Plan


Term : 5-42

Mode of

Payment



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 quarterlyinstallments for ten years and thereafter as long as he lives.

03. Three Payment Endowment Assurance Plan


Term : 12, 15, 18, 21 & 24

Mode of

Payment




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.


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end of term. Even after payment of 4th installment the full

sum assured with profits is payable if the death occurs before

maturity.

06. Group Term Life Assurance Plan


Term : 01 year

Mode of

Payment

: Yearly


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 arepayable annually in advance an thereafter the contract may be

renewed for further period(s).

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04. Prime Islami Deposit Pension Scheme


Term : 10 & 15

Mode of

Payment



Supplementary : na

Benefits : Under this plan the sum assured is payable on normal deathand double of the sum assured is payable on accidental death

or after expiry of the term sum assured with profits (if any) is

payable.

07. Group Endowment Assurance Plan


Term : 01 - 42

Mode ofPayment : Yearly



Benefits : The Scheme provides for payment of full sum assured at thedeath 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.


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08. Multiple Benefits Life Assurance Plan


Term : 10, 20, 30 & 40

Mode of

Payment



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 multipleof sum assured (for normal death) & three multiple of sum

assured (for accidental death) is payable.

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09. Child Protection Assurance PlanAge at Entry : 20 to 55 Years

Term : 10 - 30

Mode of Payment : Yearly, Half Yearly & Quarterly


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 totalsum 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 policyterm above 2 years.

10. Premium Back Term Assurance Plan


Term : 10, 15 & 20

Mode ofPayment



Supplementary : na

Benefits : Under this plan the sum assured is payable on death of the

assured before date of maturity or on survival annualpremium multiplied by the policy term will be refunded.

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 ofPayment

: Yearly, Half Yearly, Quarterly & Monthly


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.

11. Single payment Endowment Assurance Plan


Term : 10 & 15 Mode of Payment : One Time


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.


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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.

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

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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 and upliftment 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 settlethe 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.

Financial Highlights

Business Performance

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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

04 Investment 33.34 15.58 6.65 1.90 1.90

05 InvestmentIncome 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

09 Management

Exp. To

Premium

income (%)

57.65 61.25 62.21 76.50 96.64

Business Growth Rate

2006 2005 2004 2003 2002

21


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Premium

(in %)

64.34 87.53 40.48 118.82 193.10

Assets

(in %)

*609.63 98.03 84.75 42.22 33.24

LifeFund (in

%)

106.59 129.02 227.56 30044.44 36.37

22

5.95

13.0218.29

34.3

56.37

0.092.83

9.27

21.23

43.86

0

10

20

30

40

50

60

2002 2003 2004 2005 2006

Premium Life Fund

5.95

13.0218.29

34.3

56.37

0.002 0.11 0.28 1.512.93

0

10

20

30

40

50

60

2002 2003 2004 2005 2006

Premium Life Fund

5.21 7.41 13.6927.11

192.37

0

50

100

150

200

250

2002 2003 2004 2005 2006

Premium


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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%

(Taka in crore)

23

Improvement of Financial Health

Investment Portfolio


24/30

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.

Life Revenue Account

For the year ended December 31, 2006

Amount in Taka

24


25/30

Notes 2006 2005

25


26/30

BALANCE OF FUND AT THE BEGINNING OF

THE YEAR

ADJUSTMENTS MADE DURING THE YEAR

PREMIUM LESS REINSURANCE

First Year Premium

Renewal Premium

Group Insurance Premium

Gross Premium

Reinsurance Premium

Net Premium

PROFIT, DIVIDENDS AND RENTS

OTHER INCOME

19

20

21

212,269,12

7

845,480

322,174,72

5

92,662,097

616,333

210,917,43

322,174,72

5

21,917,439

240,475,960 131,621,88

240,475,96

0

1,000,881

56,651,566

(1,322,778)

562,328,78

8

32,465,431

319,440

131,621,88

495,744

343,035,06

(129,351)

342,905,71

9,549,966

161,253

Total 806,537,30

6

444,662,69

26


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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

Eleven years

Twelve years or (including though out life )

254,229,043

28,821

67,916,861

160,737,919

29,989

50,149,531

322,174,72

5

210,917,439

27

Life Revenue Account Continued


28/30

CLAMS UNDER POLICIES (INCLUDING PROVISION

FOR CLAIMS DUE OR INTIMATED ), LESS

REINSURANCE

2006 2005

By Death

By Survival

By Others (Disability Claim)

By Surrenders

Profit Commission

3,644,887

25,181,547

14,554

421,000

29,261,988

5,244

2,099,434

12,738,773

60,000

119,927

15,018,134

47,653

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

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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

ESTIMATED LIABILITIES IN RESPECT OF 2006 2005

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. Asean Re Takaful International (L) Ltd 1,118,437 240,2152. Jiban Bima Corporation 593,117 593,117

1,711,554 833,332

PREMIUM DEPOSI T 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

Outstanding Premium

The above balance represents outstanding amount of premium due on 31st

December 2006 but subsequently collected.

29


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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.

Potential changes in global or national policies

Unfavorable change in global and national policies will affect companys business

operation.
http://www.primeislamilife.com/

prime life insurance limited

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