Sonali Life Insurance Company Limited, a leading entity in Bangladesh's insurance sector, is under scrutiny following a significant drop in its year-over-year (YoY) growth for May 2024.
According to the latest Year to Date Report – Gross Premium, the company experienced a troubling 44.42 per cent decline in YoY growth compared to the same period in 2023.
The company's performance data from January to May for the years 2022, 2023 and 2024 showed an overall positive trend, with consistent increases in the number of policies issued and total premium amounts.
However, May 2024 has emerged as a stark exception. The number of policies issued this May plummeted to 1,61,000 from 2,53,000 in May 2023, indicating a significant reduction in new policy uptake.
This decline is mirrored in the total premium amount for May 2024, which fell to Tk 38.17 crore, down from Tk 68.64 crore in May 2023. This sharp decrease is in contrast to the previous months of 2024, where the company reported considerable YoY growth, including a remarkable 72.05 per cent increase in January.
Despite the disconcerting performance in May, Sonali Life Insurance's overall year-to-date statistics for 2024 still show a 9.12 per cent YoY growth, compared to a substantial 51.85 per cent in 2023.
While the year-to-date figures remain positive, the sharp decline in May's performance underscores the volatility and potential vulnerabilities within the company’s operations.
Concerns have been raised internally regarding the company's recent struggles. Over a hundred employees have attributed the downturn to the regulator-appointed administrator, Brig Gen (retd) SM Ferdous.
In a letter addressed to the state minister for finance and the Insurance Development and Regulatory Authority (IDRA), employees have expressed their grievances, blaming the administrator for the company's current predicament, according to IDRA sources.
The letter highlights that since the administrator's appointment on April 18, 2024, there has been a significant decline in business. It points out that the number of policies issued from January to May in previous years had seen substantial increases, whereas 2024 has witnessed a concerning drop.
Employees have also criticised the administrator for delays in claim settlements, a stark departure from the company’s reputation for prompt claim processing. Notably, there have been 1,062 instances of claim payment delays by 32 to 34 days, which has sent a wrong message to the market regarding the company’s financial health.
Efforts to reach SM Ferdous for comments were unsuccessful as he did not receive phone calls.
Company Secretary Abdur Rob declined to comment and directed inquiries to the company's Public Relations Officer Galib, who was also found unavailable for comments.
In April 2024, IDRA released an investigation report regarding allegations of corruption against Sonali Life Insurance.
The report said that the Board of Directors had been suspended for six months following the investigation into financial irregularities and corruption involving former chairman Mostafa Golam Quddus and several directors.
SM Ferdous was appointed afterwards as the administrator to manage the company's operations.
Performance Q3 of 2024
Sonali Life Insurance demonstrated a strong financial performance for the third quarter (July to September) of 2023, showcasing significant growth in its surplus and Life Insurance Fund.
The company's life revenue account for Q3 of 2023 indicated an excess of total income over total expenses, including claims (surplus), amounting to Tk 109.17 crore.
This marks a substantial increase from the Tk 71.38 crore surplus recorded in the same period of 2022, reflecting a robust year-on-year growth in profitability and operational efficiency.
For the cumulative period from January to September 2023, Sonali Life Insurance reported a surplus of Tk 264.95 crore.
This is a notable rise compared to the Tk 174.36 crore surplus recorded during the same period in 2022, highlighting the company’s consistent performance and ability to generate higher income relative to its expenses and claims.
Furthermore, the Balance of Life Insurance Fund as of September 30, 2023, stood at Tk 868.51 crore. This is a significant increase from the Tk 471.39 crore reported on September 30, 2022, representing a net increase of Tk 397.11 crore.
