Fareast Life running out of life
Mahfuz Emran: Fareast Islami Life Insurance was once a leading life insurance company in the country. The company is now in dire straits due to massive looting and irregularities by the owners. As the days go by the life fund of the company is disappearing. The situation is as if the life of the company is slowly running out. Even those who are currently in charge of Far East Life are not finding the right way to rescue.
According to the investigation, three years ago i.e. at the beginning of 2020, the life fund of the company was Tk 3,372.60 crore. That life fund is continuously decreasing and at the end of 2022, it stands at only Tk 468.52 crore. In other words, no new money was added to the life fund of the company in three years, on the contrary, Tk 2,904.08 crore disappeared.
Life funds of life insurance companies are compared to blood. Just as people don’t survive when they become anemic, it becomes difficult for a life insurance company to survive when its life fund becomes negative. Along with that, getting the money back to the insurance customers is at serious risk.
At present, insurance claims of thousands of customers are pending in Fareast Islami Life Insurance. These customers are not able to collect their demands even after going door to door. On the other hand, the officials of the company said that in order to save the company, initiatives are being taken to pay the customers’ demands by selling the land. However, in this case, there is a problem. The price at which the previous directors of the company bought the land is not available for sale now. Meanwhile, the company’s former chairman Nazrul Islam and former director MA Khalek have been arrested in the case of massive looting in Far East Islami Life. These two persons looted over Tk 4,500 crores from the company in different ways.
In violation of the agenda and decisions mentioned in the minutes of the former Board of Directors meeting of First Life, by making and issuing extracts or copies, the MTDR/deposits kept in various banks of the company by former director MA Khalek and former chairman Nazrul Islam as collateral against the loans of their interested persons or organizations and that collateral Babad embezzled the company’s total MTDR of Tk 816 crore through bank coordination. This MTDR stands at over Tk 1,332 crore with updated profit.
These two former directors and chairman through their close relatives bought land at a low price and sold that land to the company at a high price and embezzled about Tk 664 crore. Besides, these directors embezzled Tk 287 crore by investing and providing loans to related companies. Besides, he has embezzled about Tk 150 crore through various purchase transactions of the company.
In view of these irregularities of Nazrul Islam and MA Khalek, Bangladesh Securities Exchange Commission (BSEC) dissolved the board of directors under the control of Nazrul Islam and MA Khalek on September 1, 2021 and formed a new board of directors consisting of independent directors.
BSEC and Insurance Development and Regulatory Authority (IDRA) conducted several audits to uncover these irregularities. Through these audits, embezzlement and irregularities of about Tk 4,500 crores have been uncovered so far, in which these directors were directly involved.
Although the board was dissolved and a new board was formed, Fareast Life could not get out of danger. In the last year 2022, the life fund of the company decreased by Tk 1,256.58 crore. At the beginning of the year, the life fund was Tk 1,725.10 crore, now it has reduced to Tk 468.52 crores.
Earlier in the beginning of 2021, the life fund of the company was Tk 2,474.57 crore. At the end of the year it decreased to Tk 1,725.10 crore. That is, life fund decreased by Tk 749.47 crore. In 2020, life fund decreased by Tk 898.03 crore. At the beginning of that year, the life fund was Tk 3,372.60 crore.
Regarding the tragic outcome of First Life, the Chief Executive Officer (CEO) of a life insurance company said, “Life fund is compared to the life of a life insurance company.” The way Fareast Life’s life fund is dwindling, it seems that the life of the company is slowly coming to an end. The company is in dire straits. Keeping the company alive will be a difficult task.
In addition to the continuous decrease in life fund, the income and expenses of the company have also been negatively affected. On the one hand, the income is decreasing, on the other hand, the expenditure cannot be reined in. As a result, the company is illegally spending money in the management sector in violation of the law. Due to this, the collection of money owed by customers is more at risk.
In 2022, the company earned the first-year premium income of Tk 107.08 crore. In 2021, this income was Tk 118.82 crore. On the other hand, the renewal premium income in 2022 was Tk 531.70 crore. Renewal premium income in 2021 was Tk 573.66 crore. That is, both the premium income of the company has decreased.
A review of management expenditure data shows that the company has spent a total of Tk 152.68 crore in 2022. According to the law, the maximum expenditure limit for the year was Tk 137.71 crore. In other words, an additional Tk 14.97 crore has been spent in violation of the law. In 2021, an additional expenditure of Tk 16.99 crore. In other words, in the last two years, the company has illegally spent about Tk 32 crore in violation of the law.
The company’s investment has also been negatively affected. In three years, the company has broken through an investment of about Tk 1,000 crore. At the end of 2020, the total investment of the company was Tk 2,636.53 crore. At the end of 2022, it has reduced to Tk 1,944.90 crore.
On the one hand, customers are not getting insurance claim money from the company even though every year the law is violated and the investment is broken. Month after month, the customers are not able to collect the demand money even with dharna from door to door.
Hawanur, a customer of Far East Life, said, “I paid a lot of trouble to get insurance from Far East Life. It has been a long time since the insurance policy expired. I have been protesting the company for more than a year. I have been to many. But I am not getting the claim money. The company gives a new date for payment of the claim, but does not pay the money.
When asked about the overall situation of Far East Life, the company’s chairman Sheikh Kabir Hossain told Daily Industry, “We got the responsibility at the time of extreme danger of Far East Life. The company owes thousands of customers. So, customer trust is lost on this company. Now if the customer’s claim is paid, then confidence will return.’’
He said, “IDRA says to sell the land that is available. But the problem is that he bought the place with more money. Has embezzled money or whatever, now when we go to sell the place, we don’t get the purchase price. We sold a piece of land for more than the purchase price. Other lands are also being tried to be sold. Some of the customer’s claims are being paid with the land sale money.
When asked whether it will be possible to save the company, he said, “I think it is possible to raise the company again if we get money.” We have talked about loans, if the loan is received and the company has a lot of space, if that space can be sold and paid to the customers, then it can stand. But very difficult. In the meantime, people are vandalizing in different places, it is normal.
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