Life Insurance companies were able to bring in 59 lakh insurance policies; Nepal Life Insurance Company makes it to lead

Insurance has become important in today’s scenario. Nepal is a country where a lot of residents migrate to gulf countries in the hope of increasing their living standard. They risk their life as they move to a new place. Moreover, the quality of air that we are consuming poses high risk on our health. The news of accidents due to geographical topography that we come across also suggests we might be risking our life as we are travelling.

However, in Nepal, 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 life insurance industry. Today, general public are more likely aware about the importance of insurance. Even the increased paid up capital could not put restrictions on this industry so, nine new life insurance companies got licensed and also came into operation after the paid up capital was hiked.

Among the insurance companies, the life insurance companies existing in Nepal are:

The green box denotes life insurance companies that have been operated since a long period of time while the orange box indicates companies licensed recently. On this note, it is of no wonder that these new insurance companies might soon require funding from public in the form of IPO. Thus, to facilitate the enthusiasts in the primary and secondary market, the article has been prepared accumulating the analysis of all the new and old life insurance companies that can be useful for the purpose of investment.

Financial overview:

1. Number of policies:

Once the paid up capital of insurance companies are in the same range, number of insurance policies identify the company’s ability to market its schemes and products. Prime Life Insurance Company (PLIC) has been maintaining a lead position with 16.40 lakhs insurance policies followed by Nepal Life Insurance Company Limited (NLIC) with 11.81 lakhs policies and Metlife American Life Insurance Company (ALICO) with 8 lakhs policies as of first quarter of FY 2075/76.

Among the newly licensed insurance companies, Reliable Nepal Life Insurance Company (RENLICL) is in the lead with 2.01 lakhs policies. Union Life Insurance Company (ULICL) has the second highest number of insurance policies i.e. 91.58 thousand followed by Citizen Life Insurance Company (CLICL) with 71.18 thousand policies.

However, the executives of all life insurance companies should understand the quality of insurance policies is important rather than number of insurance policies as the component that these companies are dealing with is human life. Moreover, these policies might include foreign employment insurance policies which provides less net premium so few insurance companies do not prefer such policies. Hence, judging an insurance company based only on number of insurance policies would be absurd.

Find the descending order of both old (green colored) and new (orange colored) life insurance companies in terms of no. of insurance policies:

2. Net premium:

As of first quarter of this fiscal year, among the infant insurance companies, Union Life Insurance Company (ULICL) has the highest net premium of Rs 39.15 crores. It is followed by Reliable Nepal Life Insurance Company (RENLICL) with net premium of Rs 22.22 crores.

Among the previously registered companies, NLIC has the highest net premium amounting to Rs 5.43 arba. It is followed by Life Insurance Corporation (LICN) and National Life Insurance Company (NLICL) with a net premium of Rs 2.89 arba and Rs 1.37 arba.

Find the descending order of both old (green colored) and new (orange colored) life insurance companies in terms of no. of net premium:

3. Life insurance fund

Life insurance fund is considered to be one of the most important factors in the financial statement. This indicator provides an estimate on how much advance preparation has an insurance company done for crisis. If we analyze the insurance fund of first quarter of 2075/76, Nepal Life insurance Company (NLIC) has the highest insurance fund of Rs 54.43 arba. Life Insurance Corporation Nepal (LICN) stands at the second position with a fund of Rs 46.04 arba. National Life Insurance Company Limited (NLICL) is seen in the third position with Rs 22.54 arba in insurance fund.

In context of insurance funds, Union Life insurance Company (ULICL) has the highest insurance fund of Rs 55.76 crores followed by IME Life Insurance Company (IMELICL) and Sun Nepal Life Insurance Company (SNLICL). IMELICL and SNLICL have insurance funds of Rs 25.80 crores and Rs 23.81 crores.

Find the descending order of both old (green colored) and new (orange colored) life insurance companies in terms of insurance fund:

4. Paid up capital:

Nepal Life Insurance Company (NLIC) has the highest paid up capital (Rs 4.40 arba), followed by National Life Insurance Company (NLICL) (Rs 2.62 arba) and Prime Life Insurance Company (Rs 1.78 arba). The old life insurance companies need to meet the paid up capital of Rs 2 arba at the soonest possible.

Among the newly licensed life insurance companies, the company with highest paid up capital is Citizen Life insurance Company (CLICL) with Rs 1.75 arba. Jyoti Life Insurance Company (JLICL), in the second position has the paid up capital of Rs 1.54 arba. Finally, Union Life Insurance Company (ULICL) has a paid up of Rs 1.51 arba. All 9 newly licensed life insurance companies are yet to issue IPO shares to the general public to make minimum paid up capital of Rs 2 arba.

5. Reserves and surplus:

Nepal Life insurance Company Limited (NLIC) has the highest reserve of Rs 3.65 arba. It is further followed by MetLife American Life Insurance Company (ALICO) with a reserve fund of Rs 1.58 arba. Finally, Prime Life Insurance Company (PLIC) is seen in the third position with a reserve of Rs 1.05 arba.

In context of reserves and surplus, Reliable Nepal Life Insurance Company (RENLICL) has highest reserve with 17.42 crores followed by Jyoti Life Insurance Company (14.33 crores). In the third place stands Union Life Insurance Company (ULICL) with a reserve of Rs 12.77 crores.

6. Net profit:

Among the life insurance companies, the first quarter report shows that Nepal Life Insurance Company (NLIC) has earned the highest net profit of Rs 20.42 crores. It is further followed by National Life Insurance Company Limited (NLICL) with net profit of Rs 8.50 crores. Finally, Prime Life Insurance Company (PLIC) has a net profit of Rs 6.80 crores.

Among the new life insurance companies, Reliable Nepal Life Insurance Company (RENLICL) with net profit of Rs 5.26 crores. Secondly, Union Life Insurance Company (ULICL) reported net profit of Rs 3.67 crores. Sun Nepal Life Insurance Company (SNLICL) has a net profit of Rs 3.17 crores.

The provided net profit figure is not the complete picture. Usually, net profit figure is increased once actuary valuation has been completed. Amount from life insurance fund is transferred to net profit after such valuation. Hence, the amount is likely to escalate.

Find the descending order of both old (green colored) and new (orange colored) life insurance companies in terms of net profit:

7. Annualized EPS

The insurance company that has won the race of annualized EPS is Surya Life insurance Company (SLICL). The company’s annualized EPS stands at Rs 22.36. Nepal Life Insurance Company (NLIC) is seen in the second place with an EPS of Rs 18.57. Finally, Gurans Life Insurance Company (GLICL) has an EPS of Rs 16.42.

Among the new life insurance companies, Reliable Nepal Life Insurance Company (RENLICL) has the highest EPS of Rs 15.02 followed by Union Life insurance Company (ULICL) with an EPS of Rs 9.76. In the third position, we have Sun Nepal Life Insurance (SNLICL) with an EPS of Rs 9.07.

Find the descending of both old (green colored) and new (orange colored) life insurance companies in terms of EPS:

7. Net worth:

Analyzing the net worth per share, Nepal Life Insurance Company (NLIC) has the highest net worth of Rs 191.63 followed by Prime Life Insurance Company (PLIC) with net worth of Rs 158.96. In the third place, we have Gurans Life Insurance Company (GLICL) with net worth per share of Rs 154.23.

Jyoti Life Insurance Company (JLICL) has a net worth of Rs 110.05. IME Life Insurance Company (IMELICL) has the net worth per share of Rs 108.089.

Find the descending of both old (green colored) and new (orange colored) life insurance companies in terms of net worth:

P/E ratio:

The insurance company with least P/E ratio is Surya Life Insurance Company Limited (SLICL). Its P/E ratio is 22.23 times. Similarly, Prime Life Insurance Company Limited (PLIC) has a P/E ratio of 29.77 times. Finally, Gurans Life Insurance Company Limited (GLICL) has a P/E ratio of 42.57 times.

8. Market price:

The market price of these life insurance companies listed in NEPSE is as follows:

In a nutshell:

Given the study on these life insurance companies, what strengths and opportunities do you think they have in the highly dominated insurance industry? Do you think the new insurance companies will match the pace of the big giant insurance companies? Would you prefer investing in these new insurance companies if the opportunity of investment is granted? Please write in the comment section below.

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