Delta Life Insurance awaits an administrator
KEY POINTS
- Incorporated as the first private sector life insurer in 1986
- Special auditors found 47 cases of irregularities
- 10 more cases need further investigation
- IDRA wants to suspend Delta's board of directors and appoint administrator
The Insurance Development and Regulatory Authority (IDRA) now wants to appoint an administrator to the Delta Life Insurance Company Limited as special audits revealed many irregularities within the company, which can harm insurance policyholders.
The insurance regulator has already served the first private sector life insurer of the country a notice, asking to show a cause why the regulator should not suspend the board of directors for four months and appoint an administrator.
Delta Life is asked to reply within 31 January.
Earlier, the IDRA appointed Howladar Yunus & Co Chartered Accountants for a special audit to scan Delta Life's financial statements for the years 2015, 2016 and 2017.
Besides, the insurance regulator also appointed FAMES & R Chartered Accountants to scrutinise the company, said sources.
The firms reported a total of 47 points with audit objections, which, the regulator believes, is posing risks to insurance clients and the company.
The 47 points include 22 irregularities reported by Howladar Yunus and Co and 25 by FAMES & R.
FAMES & R suggested that the regulator investigate 10 more irregularities further.
The company has confessed some issues but it did not present any plan to the regulator elaborating when and how it would correct those.
An IDRA official told The Business Standard, "We want to protect policyholders' interest, and if the company fails to outline the ways how it would correct its irregularities, an administrator there is likely."
Auditors found cases like tax irregularities, unpaid claims, misuse of life funds, partial reporting of facts, and suspects fund embezzlement during procurements and other activities.
Meanwhile, in mid-November, the IDRA rejected the renewal of its Chief Executive Officer (CEO) Adeeba Rahman on the ground of failure to comply with regulatory orders, prevent financial and tax anomalies, address complaints from clients and shareholders and cooperate with the special auditors.
The company took to the court repeatedly and she is continuing as the CEO.
Adeeba Rahman did not respond to the phone calls and SMS sent by the reporters.
In the first nine months of 2019, the company's revenue from life insurance policies decreased by Tk19.73 crore from its total life fund of Tk3,849.40 crore.
Meanwhile, the Bangladesh Securities and Exchange Commission, the securities regulator, is also planning to look into the company's financial statements as the discussed irregularities might hurt shareholders too.
Delta Life Insurance began its journey in November 1986 and got listed on the bourses in 1995.
Board members' internal clash in the 2000s deprived the investors of dividends and annual general meetings (AGM).
And now, after the IDRA investigation, the company has not arranged an AGM since 2018.
The closing share price of the company at the Dhaka Stock Exchange was Tk85 per share.
The company paid a 26% cash dividend to its shareholders for the last financial year ending on 31 December 2018.
Sponsors and directors jointly hold a 36.64% stake in the company, institutional investors 24.23%, foreign investors 0.60%, and general investors 38.53%.
