The prices of life and non-life insurance companies fall by 41% compared to the 52-weeks high; 14 companies yet to meet paid up capital requirement

Thu, Dec 6, 2018 12:12 PM on Credit Rating, Exclusive, Latest, Stock Market,

The insurance sector, both life and non-life, is one of the volatile sector in the stock market in Nepal. On our last article, we discussed about how the prices of commercial banks’ scrips have fallen in comparison to the 52 weeks high price as the NEPSE hit 35 weeks low. The commercial bank sector is considered a relatively stable sector and if it hit the 52 weeks low, then what about volatile sectors like life insurance and non-life insurance.

Life Insurance

A comparison of the Last Trading Price and the 52 weeks high and low for life insurance companies is given below. Similarly, the LTP has been adjusted for bonus shares and right shares whose book closure was between Mangsir 19th, 2074 and Mangsir 19th, 2075. The last column show the percentage difference between the adjusted LTP and 52-weeks high price of that scrip.

 

As we can see in the table above, almost all of the scrips’ prices are as low as the 52-weeks low prices. Similarly, the percentage difference between adjusted LTP and 52-weeks is very high. Asian Life Insurance company’s adjusted LTP is 53% lower than the 52-weeks high, which is the highest and similar stats can be seen for rest of the companies.

Non-life Insurance

A similar comparison has been made for non-life insurance companies’ prices and their 52-week highs and lows.

 

*The book closure for EIC’s 105% promoter right shares has happened already but price adjustment hasn’t been done by NEPSE. So we have excluded this.

The table above shows that the adjusted LTPs aren’t as close to the 52-weeks lows as in case of life insurance companies. However, if we see the percentage difference between the adjusted LTP and 52-weeks high, then we can see that non-life insurance companies’ prices have fallen by slightly higher percentage than the life insurance companies’.

Surprisingly, the average price fall of the two sectors stand at 41%. However the decline range for life insurance sector lies between 32-53% and for non-life insurance sectors it lies between 17-69%, which is much wider compared to life insurance.

A total of 7 life insurance and 15 non-life insurance companies are listed in NEPSE. Out of the 7 listed life insurance companies, only NLICL and NLIC have met the Rs 2 arba minimum paid-up capital requirement. Similarly, out of 15 non-life insurance companies, only four companies – SICL, HGI, NIL and PRIN – have met the minimum paid-up capital of Rs 1 arba as mandated by the Beema Samiti.

Since 5 life insurance and 11 non-life insurance companies are yet to meet their paid-up capital requirement, we can expect more right and bonus shares.