A Comparative Study of Non-Life Insurance Companies! How have the companies been performing?

The rise in insurance industry showed a turn around after the dreading earthquake of 2015. The increasing awareness among people and their increasing living standard further benefitted the insurance industry. Today, general public are more likely aware about the importance of insurance.

Among the insurance companies, the old listed non-life insurance companies existing in Nepal are:

Besides the above mentioned companies, two unlisted companies are National Insurance Company Limited and Oriental Insurance Company Limited. Similarly, General Insurance Company Nepal Limited, Ajod Insurance Limited and Sanima Insurance Company Limited are newly licensed insurance companies. Thus, to facilitate the enthusiasts in the secondary market, the article has been prepared accumulating the analysis of all the non-life insurance companies that can be useful for investment purpose. The article does not include unlisted and newly listed insurance companies. The industry average has been calculated with reference to the 15 old non-life insurance companies.

Number of policies:

Once the paid up capital of insurance companies are in the same range, number of insurance policies identifies the company’s ability to market its schemes and products. Shikhar Insurance Company (SICL) has been maintaining a lead position with 79,130 insurance policies followed by Neco Insurance Company Limited (NIL) (68,463) and Premier Insurance Company (PIC) (47,068) as of first quarter of FY 2075/76. The industry average number of policies is around 31,894.40. Seven companies have been able to maintain the number of policies above average.

 Net premium:

Among the non-life insurance companies, Shikhar Insurance Company (SICL) has the highest net premium amounting to Rs 45.81 crore. It is followed by Sagarmatha Insurance Company (SIC) and Neco Insurance Company (NIL) with a net premium of Rs 31.13 crore and Rs 30.49 crore. The industry average net premium stands at Rs 19.04 crore where seven companies are operating above the average range.

Insurance fund:

If we analyze the insurance fund of first quarter of 2075/76, Rastriya Beema Company Limited (RBCL) has the highest insurance fund of Rs 1.37 arba. Shikhar Insurance Company (SICL) stands at the second position with a fund of Rs 90.40 crore. NLG Insurance Company (NLG) is seen in the third position with Rs 73.75 crore in insurance fund. The industry average insurance fund stands at Rs 50.87 crore with four companies above average insurance fund.

Paid up capital

The governing authorities have asked all the non-insurance companies to meet the paid up capital requirement of at least Rs 1 arba. Neco Insurance Company Limited (NIL) has the highest paid up capital (Rs 1.17 arba), followed by Shikhar Insurance Company (SICL) (Rs 1.05 arba) and Himalayan General Insurance Company (HGI) (Rs 1.02 arba). Only four companies have been able to attain the paid up capital requirement so, bonus shares and right shares can be expected from the remaining companies.

Reserves and surplus:

Rastriya Beema Company Limited (RBCL) has the highest reserve of Rs 2.09 arba. It is further followed by Premier Insurance Company (PIC) with a reserve fund of Rs 67.11 crore. Finally, Sagarmatha Insurance Company (SIC) is seen in the third position with a reserve of Rs 55.73 crore. The industry average reserve and surplus stands at Rs 37.24 crore with only three companies above the average.

Net profit:

Among the non-life insurance companies, the first quarter report shows that Shikhar Insurance Company Limited (SICL) has earned the highest net profit of Rs 10.57 crore. It is further followed by Neco Insurance Company Limited (NIL) with net profit of Rs 5.67 crore. NLG Insurance Company Limited (NLG) further has a net profit of Rs 5.18 crores in the third place. The industry average net profit stands at Rs 4.15 crore. Seven companies stand above the industry average range of Rs 4.15 crore.

Annualized EPS

The non-life insurance company that has won the race of annualized EPS is Rastriya Beema Company Limited (RBCL). The company’s annualized EPS stands at Rs 76.28. It is further followed by Shikhar Insurance Company (SICL) with an EPS of Rs 39.99. Finally, NLG Insurance Company (NLG) has an EPS of Rs 32.37.

Net worth:

Analyzing the net worth per share, Rastriya Beema Company Limited (RBCL) has the highest net worth of Rs 886.11 followed by Everest Insurance Company (EIC) with net worth of Rs 386.16. In the third place, we have Sagarmatha Insurance Company (SIC) with net worth per share of Rs 309.90. The industry average net worth per share stands at Rs 263.72 with four companies above the industry average.

PE Ratio:

The PE ratio indicator shows Nepal Insurance Company Limited (NICL) has the least ratio of 17.27 times. It is further followed by IME General Insurance Limited (IGI) with a PE Ratio of 19.12 times. Shikhar Insurance Company Nepal Limited (SICL) has a P/E ratio of 19.88 times.

In a nutshell:

What do you think about the performance of non-life insurance industry?

Disclaimer: The sources of provided information are quarterly reports, website and spokesperson. Any misinterpretation from the sources might be not adjusted in the analysis.