The stock market regulator has decided to examine financial statements of Progressive Life Insurance of the last 10 years after an inquiry found huge irregularities in the company.
A three-member committee deployed in June this year looked into financial details of Progressive Life. It dug up irregularities in how the company reported its acquisition of fixed and other assets in financial statements, leading to higher net asset value than actual, which misled investors.
The probe committee reported that financial statements of the company did not reflect its actual condition. The company also violated provisions of accounting standards, which is a sign of violation of relevant securities laws.
Meanwhile, the Bangladesh Securities and Exchange Commission (BSEC) received an allegation that the life insurance company had spent Tk 550 million, including Tk 450 million, to pay policy holders, but there was no proper recording of that.
The regulator appointed five independent directors to the company in July this year.
The Insurance Development and Regulatory Authority (IDRA) recently appointed its director Abdul Mozid as an observer to the company to protect the interest of policyholders and to ensure good governance.
It stated that policyholders were constantly filing complaints over non-payment of insurance claims, which in turn was tarnishing the image of the insurance industry.
Customer complaints have been piling up while the company failed to hold annual general meetings and did not declare any dividend for the three years to 2022.
A statutory auditor of the company also identified some anomalies in the firm's premium income, purchases of disputed properties and negative cash flow.
The company's outstanding claims stood at more than Tk 300 million as of 2021, according to IDRA.
More than 40 per cent of insurance claims with Progressive Life remained unsettled while death claim settlement rate was only 30 per cent until 2021, according to the insurance regulator.
The company paid 10 percent stock dividend in 2019 for the last time. Since then, the company has not convened any general meeting while its financial indicators have been showing a declining trend.
The meetings of sub-committee, audit committee, executive committee and NRC (Nomination and Remuneration Committee) are also pending.
According to the unaudited financial report for the period of January to September 2020, the company's life revenue account decreased by nearly Tk 50 million and the life fund stood at Tk 2.76 billion. The data has not been updated since.
The inquiry committee suggested further scrutiny to identify the people behind the unlawful activities.
The BSEC now seeks more information through a special audit to protect the interest of investors. However, it is yet to finalise the auditor.
It published a tender on Sunday, inviting audit firms to apply for the job by September 26.
Mohammad Rezaul Karim, BSEC spokesperson and executive director, said the special auditor would look into Progressive Life's latest 10 years' balance sheets and elements of its financial statements, such as management and other expenses.
It will submit a report on findings within three months from the signing of a contract, he said.
The special auditor will also examine all term deposits and investments in land and land development, plant, and equipment.
In addition, the auditor would review the internal control system of the company and its effectiveness in ensuring operational efficiency, reliable financial reporting, and compliance with laws, regulations and policies.
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