The non-life insurance sector reports: What do the indicators say?

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 insurance industry. Today, general public are more likely aware about the importance of insurance.

Among the insurance companies, the old listed non-life insurance companies existing in Nepal are:

Thus, to facilitate the enthusiasts in the secondary market, the article has been prepared accumulating the analysis of all the non-life insurance companies that can be useful for investment purpose. The article does not include unlisted and newly listed insurance companies. The industry average has been calculated with reference to the 15 old non-life insurance companies.

Comparison of fourth quarter FY 2073/74 and FY 2074/75 (unaudited reports):

If we analyze the comparison, Rastriya Beema Company has been able to increase its net profit by 132.48% as compared to last fiscal year’s fourth quarter. The company, however, has decreased its net premium by 513%. Everest Insurance Company has decreased the net profit by most i.e. 18.18%.

Financial overview:

Number of policies:

Once the paid up capital of insurance companies are in the same range, number of insurance policies identifies the company’s ability to market its schemes and products. Shikhar Insurance Company (SICL) has been maintaining a lead position with 293,875 insurance policies followed by Neco Insurance Company Limited (NIL) (269,875) and Premier Insurance Company (PIC) (197078) as of fourth quarter of FY 2074/75. The industry average number of policies is around 124,129.47. Five companies have been able to maintain the number of policies above average.

 Net premium:

Among the non-life insurance companies, Shikhar Insurance Company (SICL) has the highest net premium amounting to Rs 177.35 crore. It is followed by Neco Insurance Company (NIL) and Siddhartha Insurance Company (SIL) with a net premium of Rs 98.50 crore and Rs 89.47 crore. The industry average net premium stands at Rs 64.41 crore where seven companies are operating above the range.

Insurance fund:

If we analyze the insurance fund of fourth quarter of 2074/75, Rastriya Beema Company Limited (RBCL) has the highest insurance fund of Rs 1.35 arba. Shikhar Insurance Company (SICL) stands at the second position with a fund of Rs 85.12 crore. NLG Insurance Company (NLG) is seen in the third position with Rs 71.16 crore in insurance fund. The industry average insurance fund stands at Rs 48.41 crore with five companies above average insurance fund.

Paid up capital

The governing authorities have asked all the non-insurance companies to meet the paid up capital requirement of at least Rs 1 arba. Neco Insurance Company Limited (NIL) has the highest paid up capital (Rs 1.17 arba), followed by Shikhar Insurance Company (SICL) (Rs 1.05 arba) and Himalayan General Insurance Company (HGI) (Rs 1.02 arba). Only these three companies have been able to attain the paid up capital requirement so, bonus shares and right shares can be expected from the remaining companies.

Reserves and surplus:

Rastriya Beema Company Limited (RBCL) has the highest reserve of Rs 2.07 arba. It is further followed by Premier Insurance Company (PIC) with a reserve fund of Rs 66.27 crore. Finally, Sagarmatha Insurance Company (SIC) is seen in the third position with a reserve of Rs 51.79 crore. The industry average reserve and surplus stands at Rs 35.59 crore with only three companies above the average.

Net profit:

Among the non-life insurance companies, the third quarter report shows that Rastriya Beema Company (RBCL) has earned the highest net profit of Rs 55.10 crore. It is further followed by Shikhar Insurance Company Limited (SICL) with net profit of Rs 43.16 crore. Sagarmatha Insurance Company Limited (SIC) further has a net profit of Rs 33.31 crores in the third place. The industry average net profit stands at Rs 23.88 crore. Seven companies stand above the industry average range of Rs 23.88 crore.

Annualized EPS

The non-life insurance company that has won the race of annualized EPS is Rastriya Beema Company Limited (RBCL). The company’s annualized EPS stands at Rs 206.64. It is further followed by Sagarmatha Insurance Company (SIC) with an EPS of Rs 61.88. Finally, United Insurance Company (UIC) has an EPS of Rs 52.44.

Net worth:

Analyzing the net worth per share, Rastriya Beema Company Limited (RBCL) has the highest net worth of Rs 876.58 followed by Sagarmatha Insurance Company (SIC) with net worth of Rs 301.74. In the third place, we have Premier Insurance Company (PIC) with net worth per share of Rs 290.60. The industry average net worth per share stands at Rs 213.04 with six companies above the industry average.

PE Ratio:

The PE ratio indicator shows Prabhu Insurance Company Limited ( PRIN) has the least ratio of 14.63 times. It is further followed by Siddhartha Insurance Limited (SIL) with a PE Ratio of 15.14 times. United Insurance Company Nepal Limited (UIC) has a P/E ratio of 16.10times.

In a nutshell:

What do you think about the performance of non-life insurance industry?

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