NASDAQ Halts Bancinsurance Trading
NU Online News Service, Feb. 8, 12:59 p.m. EST?The NASDAQ Stock Market said today that it had halted trading of a small Ohio collateral protection insurer, Bancinsurance Corp., after its auditor said information the company provided couldn't be trusted.[@@]
Ernst & Young, the firm's independent auditor, said it was pulling its reports for the years 2001-2003 and wrote the company yesterday that it "does not believe it can rely on the representations of management at this time."
The audit firm said Bancinsurance could not develop reliable financial statements because it has "a material weakness in its system of internal controls" related to the claim reserves of its bail bond program.
According to Ernst & Young, when auditors looked over the Columbus, Ohio-based company's 2003 financial statements information about significant claim developments in the bail bond program was not provided on a timely basis.
Ernst & Young said it was withdrawing the reports for Bancinsurance and its subsidiaries Ohio Indemnity Company and American Legal Publishing Company.
Bancinsurance President John Sokol said in a statement that the company is committed to sound financial management and has added accounting and audit professionals to "strengthen our capabilities in those areas."
His statement said Ohio Indemnity had provided reinsurance for a bail bond program that was discontinued the second quarter of last year.
According to Bancinsurance their second quarter 10-Q filing with the Securities and Exchange Commission reported some bail bond claims that were received were not reserved for since those losses related to program years in dispute.
The company said arbitration is underway and it hired a law firm last year to represent the company concerning its reinsurance contracts.
Bancinsurance also said its audit committee will review the auditors' concerns and take action to resolve them and it aims to have the withdrawn audits reissued or replaced "as soon as practicable, and to have the 2004 audit completed."
Ohio Indemnity in 2003 had assets of $84 million and $57,527,207 in net premium written, according to Highline Data.
Ohio Indemnity provides insurance for banks and other lenders against theft or damage of loan collateral where the borrower has failed to secure or maintain adequate insurance coverage for the loss.
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