A Comparative Study of Non-Life Insurance Companies! How have the companies been performing?

Tue, Feb 16, 2021 9:12 AM on Exclusive, Financial Analysis, Latest,

When we take a look at the numbers of non-life insurance, it seems that this sector has been growing at a steady rate. Previously, the business penetration was quite low and was not achieving its full potential but due to the covid-19, it has brought a favorable scenario for the insurance business which can be seen by the increasing numbers. 

So, let's dive into the major indicators of non-life insurance in the second quarter of FY 2077/2078. 

Net Profit:

Neco Insurance Company Limited (NIL) posted the highest net profit of Rs 26.40 crore till Q2 of 2077/78. The second highest profit of Rs 24.14 crore was reported by Shikhar Insurance Company Limited (SICL). The industry average net profit stands at Rs 11.56 crore.

Among all the companies, 2 companies reported decline in net profit in compared to corresponding quarter of previous year.

Paid-up capital

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

Shikhar Insurance Company Limited (SICL) reported the highest paid-up capital worth 1.37 Arba. Neco Insurance Company Limited (NIL) reported the second highest capital worth Rs. 1.31 Arba. 

As per Q2, only 1 company; Rastriya Beema Company Limited (RBCL) reported less than regulatory requirement capital. 

Reserves and Surplus

The reserve and surplus have an outlier at the upper end. RBCL has the highest reserves of Rs 3.03 arba which also impacts the industry average figure.

Following RBCL, SICL has the highest reserves of Rs 1.03 Arba. Similarly, the three newly licensed companies have the lowest reserves.

Insurance Fund

RBCL and SICL has the highest insurance fund of Rs 2.31 arba and Rs 1.17 arba respectively. The industry average insurance fund stands at Rs 69.08 crore. The newly licensed insurance companies have managed to secure an insurance fund of more than Rs 5 crore.

Net premium

Net premium is the main source of earning for insurance companies. The average net earnings from premium stood at Rs 38 crore till Q2 of 2077/78.

NIL reported the highest earning of Rs 1.27 arba followed by SICL at Rs 1.18 arba. RBCL despite high reserves and insurance fund has the lowest (among listed companies) net premium collection of Rs 22.46 crore.

Number of policies

The average number of policies stands at 79,342. NIL and SICL ranked highest whereas SGI and RBCL are in lower positions among the old companies.

Unpaid Claims:

The average unpaid claims stood at Rs. 83.24 crores. As per the report published by the company's Sanima General Insurance Company Limited (SGI) has the lowest unpaid claims worth Rs. 17.44 crores. 

On the other hand, Premier insurance Company Limited (PIC) has the highest unpaid claims worth Rs. 2.37 Arba.

Net worth per share

RBCL has the highest net worth per share of Rs 2108.62 per share given its low capital base. SICL has the second-highest net worth of Rs. 267.97. The industry average net worth per share stands at Rs 295.70 per share.

Annualized EPS

The highest annualized EPS has been reported by RBCL at Rs 103.06 followed by NIL at Rs 40.08. The lowest annualized EPS was reported by UIC at Rs 5.35 per share.

PE ratio

The industry average PE ratio stands at 57.67 times. The lowest PE ratio was reported by NLG at 28.38 times followed by PIC at 30.18 times.