EPS, P/E ratio and Net worth of Life Insurance Companies (Comparative study)

ShareSansar, August 30:

A total of nine Life Insurance Companies are in operation at present, out of which only 7 are listed companies. MetLife American Life Insurance Company Limited and Rastriya Beema Sansthan are not being traded at NESPE.

Unaudited fourth quarter report of the all the Life Insurance Companies have been published. Let us look at the EPS, P/E ratio and net worth of the life insurance companies.

Earnings per share allow us to compare different companies’ power to make profit per share.

As per the fourth quarter report of the fiscal year 2071/72, the annualized average EPS of the Life Insurance Companies stood at NPR 8.62. Whereas, out of the 7 listed life insurance companies only three life insurance company EPS was above theindustry average. During the reviewperiod, National Life Insurance Company (NLICL)had the highest annualized EPS i.e. NPR 21.11; whereas Life Insurance Corporation Nepal Limited (LICN) had the lowest annualizedEPS of NPR 3.02.

(Income from actuary valuation of Life Insurance Fund is excluded.)The EPS of the life insurance companies would drastically increase after the actuary evaluation figure unveils and that comes to public only when the audited report is approved by the regulatory body.

The higher the P/E the more the market is willing today for the company’s earnings.The investors take the P/E ratioas a tool to measure the price ofcompanies’ stock.

The overall average P/E ratio of the life insurance industry was at 285.99 times. Life Insurance Corporation Nepal Limited (LICN) had the highest P/E ratio during the review period. Its P/E ratio stands at 926.82 times. Prime Life Insurance Company Limited (PLIC) had the lowest P/E ratio of 78.48 times.

The net worth of any entity is the amount of money that will remain, if all the entity’s assets are sold and all the entity’s debts are paid.

Prime Life InsuranceLimited (PLIC) has the highest net worth among all other life insurance companies. Its net worth per share stands at NPR 201.71.

*Prime Life Insurance Company Limited (PLIC) has not been able to hold their AGM for the last two fiscal year 2069/70 and 2070/71 whereas Gurans Life Insurance Company Limited (GLICL) needs to hold its AGM for the fiscal year 2070/71. Although, the Company Act 2063 requires all public companies to hold their Annual General Meeting every year, it has not been possible.

Note: EPS, P/E ratio and Net worth per share would change immensely after the actuary evaluation of the company is done.