Although Rupali Life Insurance Company, a publicly traded insurer, is yet to publish its last three quarters’ financial reports its shares continue to rise in an unprecedented way.
The life insurer could not yet publish its 2022 annual report, while it also failed to release the first and second quarterly financial statements of 2023, but its shares rose by 136 per cent just in the last two months.
Usually, a company’s shares get a boost when it publishes a progressive financial report or reveals plan on business development or expansion.
But, in absence of any such indicator, Rupali Life shares are continuing to rise fast during the period.
Rupali Life shares rose from Tk 91.2 on May 7 to Tk 215.2 in July 13.
Following this unusual share price jump, the Dhaka Stock Exchange (DSE) served the company with show cause notices twice during the period— first in May 22 and the later in July 6.
But the company said every time that there was no undisclosed price-sensitive information for an unusual price hike or increase in the volume of the traded shares.
The life insurance company started the year 2023 with a share price of Tk 81.8 per share.
As the company’s 2022 annual report is still unpublished, it has also not declared any dividend so far for the year ending in December last year.
So, it is obviously clear that Rupali Life shares are getting overvalued sans any financial progress or business expansion reports.
According to company officials familiar with the matter, the company could release its 2022 annual financial in April this year but that was not possible because the financial valuation had not been conducted by actuaries in time.
Amirul Islam (Mukit), company secretary at Rupali Life Insurance Company told The Business Post that that life insurance companies cannot declare dividends immediately after the end of a year, mainly due to legal complications.
The insurance regulator – IDRA – gives life insurance companies six months after the end of an accounting year. Basically, during this time, companies get their financial reports valued by actuaries, he added.
“But due to the lack of abundant number of actuaries, it takes additional time to get our financial reports valued, which led us to fail to publish financial reports in time,” Amirul Islam continued.
That’s why we still could not declare any dividend for the year ending in December 2022.
The company, which was listed on the DSE in 2009, disbursed an 18 per cent cash dividend for the year ended in December 2021. With an authorised capital of Tk 30 crore, the company has a paid-up capital base of Tk 100 crore.
The insurer’s total number of securities is Tk 3.01 crore.
Sponsor-directors own a 32.07 per cent stake in the company, while institutional investors own 28.72 per cent and the general public 39.21 percent as on May 31 this year.
The insurer’s life revenue account for July–September 2022 was Tk 0.76 crore against Tk 0.94 crore for the same period one year ago.
Moreover, the life revenue account for January–September 2022 was Tk 2.64 crore with total life insurance fund of Tk 531 crore against Tk 2.71 crore and Tk 507.8 crore respectively for the same period of the previous year.