BSEC orders special audit of Fareast Islami Life Insurance

Bangladesh Securities and Exchange Commission (BSEC) has appointed a chartered accountancy firm to conduct a special audit of Fareast Islami Life Insurance to find irregularities in the insurer's financial reports between 2016-18.

The stock market regular has given A Wahab & Co, one of the oldest and reputed accountancy firms in the country, two months to complete the audit.

Fareast Islami Life's financial reports for 2018 were audited by Mahfel Huq & Co, which made no qualification, adverse or disclaimer opinion in its report.

"However, we found some irregularities and there are huge allegations against the company on not paying claims," said a senior official of the BSEC preferring anonymity.

"And so, we want to see whether the company is doing its activities in the right manner," he added.

Having made its trading debut with the country's bourses in 2005, Fareast Islami Life's first year and renewal premium income has been on the decline since 2016.

The third generation insurer's premium income shrank by about 3.9 per cent from Tk 302 crore in 2016 to Tk 290 crore in 2018.

During the same period, the number of first year and renewal policies dropped around 25 per cent from 235,761 to 176,740, according to the company's annual report for 2018.

And with paid-up capital of Tk 74 crore, Fareast Islami Life's dividend yield has also fallen over the years.

The yield stood at 3.16 per cent in 2018 while it was 3.50, 5.17, and 6.24 per cent respectively in the preceding years.

Fareast Islami Life also witnessed a significant decline in its revenue from life insurance policies between July-September 2019, when it fell by Tk 128 crore. It had dropped by Tk 24 crore during the corresponding period of the previous year.

Sponsors hold 32.56 per cent of the company's shares while institutional investors account for 42 per cent and the remainder is owned by general investors.

The insurers stocks were last traded at Tk 48.50 per share.