Comparative analysis of non-life insurance companies for second quarter of 2076/77; Find out which ones did well!

Tue, Feb 18, 2020 1:12 PM on Exclusive, Financial Analysis, Stock Market,
Comparativ...

The general insurance sector of Nepal comprises of 20 companies in total. The 15 companies are listed in Nepal Stock Exchange (NEPSE). Likewise, Ajod Insurance, General Insurance Company, and Sanima general Insurance are newly licensed companies who haven't issue Initial Public Offering (IPO) yet.

IPO of AJOD has been added in the SEBON pipeline to issue a total of 30 lakh units. GICNL is also on the process of issuing IPO worth Rs 30 crore. It has appointed NIBL Ace as the issue manager but the issue hasn't been added to the SEBON pipeline yet. SIACL is also on the process of bringing IPO.

The other 2 companies vis-à-vis National Insurance and Oriental Insurance are old companies but they haven't floated IPO yet as they are the subsidiary companies of Indian Insurance Companies.

Paid-up capital

The regulator of the insurance industry, Beema Samiti, has set the minimum paid-up capital requirement at Rs 1 arba.

As you can see the list, 11 companies have met their capital mark and 7 are yet to meet. LGIL is distributing 9.75% bonus shares and had issued 20% right shares, after which the paid-up capital will reach Rs 1.14 arba.

Similarly, after the IPO of AJOD, GICNL and SAICL, each of their paid-up capital will also meet the capital mark. Likewise the current paid up capital of PICL stands at Rs.64.15 Crore. After the adjustment of 60% right share to be issued from Falgun 18, 2076, the paid up capital will increase to Rs.1.02 Arba.

NLG Insurance is also issuing 60% right shares from Falgun 22, 2076 after which its capital will reach Rs 1.02 arba. Last on the list is RBCL with lowest paid-up capital and no plans as to how it is going to reach the mark. The company had last distributed 114.27% bonus shares on FY 2062/63 and after that it hasn't distributed any dividend or issued right shares.

Reserves and Surplus

The reserve and surplus has an outlier at the upper end. RBCL has the highest reserves of Rs 2.64 arba which also impacts the industry average figure. Therefore, if we exclude RBCL, the industry average stands at Rs 22.12 crore.

Following RBCL, SICL has the highest reserves of Rs 57.32 crore. Similarly, the three non-listed companies have the lowest reserves.

Insurance Fund

RBCL and SICL has the highest insurance fund of Rs 1.93 arba and Rs 1.17 arba respectively. The industry average insurance fund stands at Rs 55.84 crore. Likewise on the lower end are the non-listed companies preceded by EIC at Rs 25.57 crore.

Net premium

Net premium is the main source of earning for insurance companies. The average net earning from premium stood at Rs 33.19 crore till Q2 of 2076/77.

SICL reported the highest earning of Rs 90.56 crore followed by NIL at Rs 70.99 crore. RBCL despite high reserves and insurace fund has the third lowest net premium collection of Rs 14.48 crore.

Net profit

RBCL posted the highest net profit of Rs 31.44 crore till Q2 of 2076/77. The second highest profit of Rs 23.23 crore was of SICL. The industry average net profit stands at rs 9.18 crore.

Number of policies

The 18 non-life insurance companies have a total of 11.77 lakh insurance policies currently in force. The average number of policies stands at 65,403. SICL and NIL ranked highest whereas SAICL and RBCL are on the lower positions.

Net worth per share

RBCL has the highest net worth per share given its low capital base. NLG has the second-highest net worth of Rs 278.21 per share. The industry average net worth per share stands at Rs 269.22 per share.

Annualized EPS

The highest annualized EPS has been reported by RBCL at Rs 235.88 followed by SICL at Rs 43.95. The lowest annualized EPS was reported by UIC at Rs 3.94 per share.

PE ratio

The industry average PE ratio stands at 29.90 times. The highest PE ratio was reported by UIC at 88.55 times followed by RBCL at 38.15 times. AJOD, GICNL and SAICL haven't been listed yet and therefore doesn't have PE ratio. Similarly, NIL has the lowest PE ratio of 16.79 times.

Overall