Life Insurance sector reports an average compounded annual growth of 27.4% in major indicators for the last five years

Fri, Jun 21, 2019 11:56 AM on Exclusive, Recommended, Stock Market,

The insurance industry, over the years, has shown considerable growth in Nepal. The industry experienced a turnaround after the devastating earthquake of 2015.

However, we'll never know if it really did experience substantial growth. Thus, we'll be analyzing the growth of Listed Life Insurance Companies in the last five years on same major parameters.

RESERVES AND SURPLUS

The industry average reserves and surplus for life insurance sector has grown by 263% from Q3 of FY 2070/71 to Q3 of FY 2075/76. The compounded annual growth rate stands at 29%, where the amount has gone up from Rs 35.3 crore to Rs 1.28 arba.

Among the seven listed life insurance companies, Nepal Life Insurance Company (NLIC) has shown the highest growth of 45.11% compounded annual growth followed by Surya Life Insurance Company (SLICL). Likewise, Asian Life Insurance Company (ALICL) has the lowest growth rate among all.

 

*Data taken from SSpro.

LIFE INSURANCE FUND

Similar to the reserves and surplus, the industry average life insurance fund has also grown by 29% in the reviewed 5 years' period. The average amount has grown from Rs 6.6 arba to Rs 24.2 arba by 264%.

Surya Life has topped the list with a CAGR of 53% and National Life has the lowest CAGR of 21.9%.

 

*Data taken from SSpro.

NET PROFIT

The net profit of life insurance companies has also shown an average of 22% compounded annual growth rate over the period of five years. The industry average net profit has increased by 172% from Rs 6.7 crore to Rs 18.4 crore.

Surya Life has yet again topped the list with a CAGR of 42.7% followed by LIC Nepal at 40%. At the other end, Prime Life has the least growth of 12%.

*Data taken from SSpro.

NET PREMIUM

The industry average net premium of listed life insurance companies has grown from Rs 1.45 arba to Rs 5.12 arba by 254%, with a CAGR of 28%.

Surya Life has reported the highest CAGR of 54%, followed by Nepal Life at 33.8%. Likewise, the lowest growth has been reported by Prime Life at 19% only. 

 

*Data taken from SSpro.

INDUSTRY AVERAGE SUMMARY

The table below gives the snapshot of how the major indicators have changed during the period of 5 years from third quarter of FY 2070/71 to this third quarter.

 

*Data taken from SSpro.

As you can see all the indicators show positive growth in the industry ranging from 22% to 30%. In a similar story we did for commercial banks, their growth in major indicators also ranked from 20 to 30 percent.