Expect better dividend from NLIC as its business grows like anything

ShareSansar, June 30:

If things go as planned, Nepal Life Insurance Company Limited is planning to give a better dividend than what it pledged last year, owing to its growing business.

“Since we have had a very healthy growth this year, the shareholders can definitely expect a better return – if everything goes as per the plan,” Chief Executive Officer of NLIC Vivek Jha told ShareSansar today.

NLIC had distributed 126 percent dividend, (70% bonus shares and 56% cash dividend) in the previous fiscal year. Last year, it distributed 98.5 percent dividend, which again included 70 percent bonus shares and 28.5 cash dividend.

Jha went on to explain why the shareholders can expect better dividend this time around.

Talking in terms of figures, he said, NLIC has already reported more than Rs 18 crore profit in nine months, and has a surplus of Rs 20 crore, which it had set aside last year. Hence, it already has more than Rs 38 crores in profit at the moment. And the profit of the fourth quarter as well as valuation profit is yet to be added to that amount.

“This year our premium income has grown cent percent meaning the growth is rapid and huge. This also means our life fund size is growing in the same proportion. Last year, our life fund was Rs 12.5 arba. We assume that it will be more than Rs 15 arba this year,” he informed.

Last year NLIC’s premium income from term insurance was Rs 37 crores. This year it has crossed Rs 50 crores in just eleventh months. So it has made a huge growth here, again.  

“My profit from term insurance will increase considerably this year. Last year my profit from the term insurance was around Rs 22 crores; I expect it to increase by a few crores this year,” he added.

Nonetheless, insofar as the normal profit is concerned, he thinks the company will have a neck-to-neck growth as compared to the last year.

“As our life insurance fund has grown considerably, we also have to raise the capital base. But one more thing that we should take into account is that last year we had two years of valuation, but this year we have only one year of valuation,” he explained.

However, Jha was quick to add that since the size has grown, may be it would compensate (for the amount raised for share capital). “And not to forget, whatever premium we have collected this year will bear results for the shareholders next year,” he added.

Hinting at the steadily growing profitability of the company, the NLIC CEO said that “a very encouraging sign is that company’s market share is growing rapidly as well. Three years back, it was 22 percent, last year it grew to around 28 percent, and this year it has increased to 39 percent.

“And we believe in creating the market for ourselves. We all know that only 5 to 6 percent of the market has been covered, and most of those who hold the policies are underinsured. We are targeting that segment, too,” he said of the company’s plan.

Jha said the challenge they are facing right now is the yield as the rate of interest is going down, and they have been compelled to heavily rely on the fixed deposits in the bank for good returns.

“To overcome this challenge, we are aggressively mulling on alternative plans to maximize returns. But let us be loud and clear: whatever we do to increase our profitability, our foremost priority is to ensure the safety of policyholders’ money. Hence, we are planning to strike a perfect balance between optimum safety of our investment and returns,” he clarified.