Insurance stocks dominated top gainers’ chart on Tuesday
All insurance stocks gained on Tuesday, a day after the regulatory authority asked all insurance companies’ sponsors to raise their stakes to 60 per cent and minimum paid-up capital within a month.
For life insurance companies, the paid-up capital must be at least Tk 30 crore, and for non-life insurance companies, Tk 40 crore.
Of the 49 life and non-life insurance companies listed on the Dhaka Stock Exchange, only five -- Crystal, Dhaka, Express, Reliance and Bangladesh National -- have more than 60 per cent shares held by their sponsor-directors.
The long-awaited enforcement of section 21(3) of Insurance Law, 2010 by the Insurance Development and Regulatory Authority thrilled the market, according to stockbrokers.
Of the top 10 gainers, 10 were insurance companies, which saw their share prices soar as much as 10 per cent.
General insurance stocks gained 9.5 per cent andlife Insurance 5.2 per cent.
Green Delta and Agrani emerged as the best performers, gaining 10 per cent each to close at Tk 64.9 and Tk 34.1 respectively, while Pragati, Provati, Dhaka, Islami, United, Asia Pacific, Peoples and Reliance gained markedly.
Meanwhile, most of the listed general insurance companies have reported higher net profit between July and September from a year earlier on the back of increased premium income.
The bar on insurers from offering more than 15 per cent commission to agents by the insurance regulator accounts for the higher profit, said Sheikh Kabir Hossain, president at the Bangladesh Insurance Association.
Previously, companies would offer as much as 60 per cent of the premium as commission to get business, which, according to good companies, was hurting the industry.
“We have worked closely with the regulatory bodyto keep the commissioning under 15 per cent. This increased the premium income of the companies,” Hossain added.
Coincidentally, insurance companies, especially the general insurance ones, are having an unbelievable run at the stock market in recent months.