NLG INSURANCE COMPANY LIMITED
Fri, Mar 29, 2013 12:00 AM on Company Analysis,
NLG INSURANCE COMPANY LIMITED
Board of Directors of NLG Insurance Company Limite
Mr. Sanjay Bahadur Shah, Chairman
Qualification: Master of Business Administration (MBA)
Work Experience: Co-founder and Chief Executive Officer of Finaccess Private Limited; Former Chairman of Bank of Kathmandu and many years of working experience as a senior advisor to Danish International Development Agency and in other international development projects.
Mr. Kush Prasad Malli, Director
Qualification: Intermediate in Arts (IA)
Work Experience: Chief Secretary of Nepal LP Gas Udyog Sangh; Former Chairman of Butwal Udyog Banijya Sangh and currently working as advisory for this organization; He is currently Chairman of Malli Brothers Pvt. Ltd., A.M. International Pvt. Ltd. , Merchant and Investment Pvt. Ltd. and Reliance Finance Ltd; Promoter of Maya Devi Technical College. Likewise, he also holds the working experience of more than 30 years in various business activities.
Mr. Anmol Singh, Director
Qualification: Bachelor Degree in Financial Accounting and Auditing
Work Experience: Promoter and Director of Mailung Khola Hydro Power Company Ltd.; Former Director of National Life Insurance Company Limited; one of the founding members of Nepal Youth Entrepreneurship Forum related to FNCCI.
Mr. Bhuwaneshor Prasad Shah, Director
Qualification: Master of Business Administration (MBA)
Work Experience: 17 years of experience in banking sector. Likewise, experience of 15 years as Director and Management member in other private sectors.
Dr. Hemraj Subedi, Director
Qualification: Doctor of Philosophy (PHD )
Work Experience: Director in Bank of Kathmandu as a representative of general shareholders; Program Coordinator of Peace and Development Research Department, Tribhuvan University.
Management Team of NLG Insurance Company Limited
Mr. Vijya Bahadur Shah, (Chief Executive Officer)
Qualification: Chartered Accountant (CA) and Master of Business Administration (MBA)
Work Experience: 25 years of experience in Management Field.
Mr. Noor Prakash Pradhan (General Manager, Chief Operating Officer)
Qualification: Master of Business Administration (MBA)
Work Experience: 25 years of experience in Insurance sector.
Mr. Surendra Kumar Shrestha (Assistant Manger)
Qualification: NA
Work Experience: NA
Mr. Manoj Shrestha (Senior Manager)
Qualification: Chartered Accountant (CA)
Work Experience: 10 years of experience in Management Field.
Capital Structure
FINANCIAL HIGHLIGHT OF THE COMPANY
Figure in Rs “000”
NLG Insurance Company Ltd. currently has the size of 70% of the issued capital as its paid-up capital i.e. NPR 157.5 million. As per the regulation of the Insurance Board, the company is required to maintain NPR 250 million paid up capital and to do so, the company in the previous fiscal year issued right shares to its existing shareholders to increase its size to current paid up value. Now, company plans to obtain NPR 67.5 million through this IPO to increase its paid up to NPR 225 million and meet the remaining portion through the distribution of the bonus share.
Looking at the reserve, the company has made a steady growth in reserve with passage of time but it should be considered that the insurance reserves are not like that of banking reserve. As the insurance company is exposed to unclaimed insurance amount, there are chances of the decrease in reserve amount in the future date. So, there is high probability of decrease in the reserve and surplus figure of the second quarter of this fiscal year by the end, like that of preceding years.
Insurance Fund is also a reserve created through the allocation of profit amount of the company. To counter the risk of various natures, the company has allocated the funds in various heading like Fire Insurance, Marine Insurance, Motor Insurance, Engineering Insurance and Other Insurance which collectively is called Insurance Fund. These funds are mainly used to pay the claimed insurance amount under the various insurance policies.
The revenue account of the company mainly accumulates the income earned from the various insurance policies like Fire, Motor, Engineering, Marine and other Insurance. Looking at the previous three fiscal years data, the company has made a pretty hefty growth in the last fiscal year i.e. 225.23%. However, in the second quarter of the current FY 2069/70, the company’s revenue account has taken a hit of 29.09% which signifies that the company’s performance may fall back than that of the preceding fiscal year.
Similarly, the insurance companies are also required to maintain a provision account for losses. Mainly this provision account is prepared to offset risk arise from the investment losses, Loan losses, doubtful debtors and other risks. If we see the second quarter report of past three years, we find that there is no provision amounts maintained like that in banking reports as the company has allocated the provision only at the year end.
Looking at the provision data, it suggests that the risk in the investment portfolio of the company is pretty volatile as the company that did not had provisions for two years before the FY 2066/67 needed to maintain provision worth NPR 7,251 thousand in that year whereas in the subsequent FY 2067/68 it decreased its provision by 93.70% but again surge by 1703.06% in the last fiscal year.
Despite the increase in the net provision the company still maintained a healthy growth in the net profit in the previous fiscal year mainly because of the heavy growth in revenue account. But if we look at the current fiscal year second quarter, we find that the growth in the Net profit is negative i.e. -5.76%. So, as mentioned above, there is a high chance of drop in company’s performance in this fiscal year as compared to previous FY 2068/69.
If we have a brief look at the Net Worth, EPS, ROA and ROE of the past three fiscal years; company has maintained a pretty impressive growth. The net worth of NPR 210.95 indicates the company is in sound position. However, it should be considered while calculating the net worth of insurance company, the insurance fund reserve and catastrophe fund are also taken into consideration apart from the general reserve.
Similarly, if we compare the second quarter of FY 2069/70 to that of FY 2068/69, we can see that all the indicators were in better position in previous fiscal year second quarter. The decrease in the revenue account, which is the main life and sole of the company, has affected the overall performance of the company compared to previous fiscal year. Having said that, the annualized ROE is still stands higher than the current market interest rate. Likewise, the net worth of company is still above the NPR 200 mark which is still far better than the most of the new companies listed on Nepal Stock Exchange.
In conclusion, we come to understanding that the company is issuing IPO to meet the NPR 250 million paid up capital and there is chances of bonus share in the future date. Looking at the financial highlights, the company has made steady growth in the past years but in the current fiscal year, the performance of company is not up to par with that of previous fiscal year. Likewise, there is the case of provision amount which for one is volatile in nature and secondly is maintained at the year end; so it also should be taken into consideration while investing.
COMPANY’S WEBSITE: http://www.nlg.com.np
FOR INFORMATION ON FORM SUBMISSION COUNTERS: CLICK HERE
- Initial Public Offering (IPO) Name: NLG Insurance Company Limited
- Issued Units: 0.675 million
- Per Unit Cost: NPR 100
- IPO Size: NPR 67.5 million
- Units Allotted for Staff: 27 thousand
- Size Allotted for Staff: NPR 2.7 million
- Units Allotted for Mutual Fund: 33.75 thousand
- Size Allotted for Mutual Fund: NPR 3.375 million
- Units Allotted for General Public: 0.61425 million
- Size Allotted for General Public: NPR 61.425 million
- Opening Date: 2069/12/16
- Closing Date (Minimum): 2069/12/20
- Closing Date (Maximum): 2069/12/30
- Minimum Investment Units : 50 units
- Minimum Investment Amount: NPR 5000
- Maximum Investment Units : 20 thousand
- Maximum Investment Amount: NPR 2 million
| Shareholder’s Name |
Units |
Percentage (%) |
| National Life Insurance Company Ltd |
1,125,000 |
71.43 |
| Mr. Sidyashwor Kumar Singh |
98,625 |
6.26 |
| Rastriya Banijya Bank |
NA |
NA |
| Sleek Quote Limited (UK) |
NA |
NA |
| Authorized Capital |
NPR 500.00 Million |
| Issued Capital |
NPR 225.00 Million |
| Paid up Capital |
NPR 157.50 Million |
| Company |
FY 2066/67 |
FY 2067/68 |
FY 2068/69 |
FY 2067/68 Second quarter |
FY 2068/69 Second quarter |
FY 2069/70 Second quarter |
| Paid up Capital |
100,000 |
100,000 |
157,500 |
100,000 |
100,000 |
157,500 |
| Reserve and Surplus |
3,519 |
5,385 |
65,354 |
35,526 |
72,552 |
89,056 |
| Insurance Fund |
27,855 |
48,823 |
111,693 |
60,653 |
97,679 |
135,396 |
| Years |
FY 2066/67 |
FY 2067/68 |
FY 2068/69 |
FY 2067/68 Second quarter |
FY 2068/69 Second quarter |
FY 2069/70 Second quarter |
| Revenue Account (In Rs ‘000’) |
56,903 |
65,246 |
212,197 |
41,059 |
87,684 |
62,177 |
| Growth in Revenue Account (%) |
172.77% |
14.66% |
225.23% |
NA |
113.56% |
-29.09% |
| Net Provision for loss (In Rs ‘000’) |
7,251 |
457 |
8,240 |
- |
- |
- |
| Growth in Net Provision for loss (%) |
* |
-93.70% |
1703.06% |
- |
- |
- |
| Net profit (In Rs ‘000’) |
22,492 |
42,102 |
127,290 |
14,842 |
50,305 |
47,405 |
| Growth in Net Profit (%) |
7.60% |
87.19% |
202.34% |
NA |
238.94% |
-5.76% |
| Years |
FY 2066/67 |
FY 2067/68 |
FY 2068/69 |
FY 2067/68 Second quarter |
FY 2068/69 Second quarter |
FY 2069/70 Second quarter |
| Net Worth (Rs.) |
128.90 |
152.62 |
210.95 |
194.20 |
268.25 |
240.41 |
| Annualized EPS (Rs.) |
22.49 |
42.10 |
80.82 |
29.68 |
100.61 |
60.20 |
| Annualized ROA |
3.50% |
4.61% |
11.80% |
3.98% |
8.64% |
7.87% |
| Annualized ROE |
2.25% |
4.21% |
8.08% |
2.97% |
10.06% |
6.02% |
