Which life insurance company earned how much? Nepal Life and Reliable Nepal maintain the lead

Insurance has become important in today’s scenario. Nepal is a country where a lot of residents migrate to gulf countries in the hope of increasing their living standard. They risk their life as they move to a new place. Moreover, the quality of air that we are consuming poses high risk on our health. The news of accidents due to geographical topography that we come across also suggests we might be risking our life as we are travelling.

However, in Nepal, 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 life insurance industry. Today, general public are more likely aware about the importance of insurance. Even the increased paid up capital could not put restrictions on this industry so, nine new life insurance companies got licensed and also came into operation after the paid up capital was hiked.

Among the insurance companies, the life insurance companies existing in Nepal are:

Besides the names in the list, Mahalaxmi Life Insurance, the 19^th and the youngest life insurance company of Nepal, has started its operation from Magh 27, 2075. The life insurance claims that the Mahalaxmi Double Insurance policy and Investment Return policy among the 3 all-set policies are the most innovative and different insurance policies ever launched in Nepal.

Thus, to facilitate the enthusiasts in the primary and secondary market, the article has been prepared accumulating the analysis of all the new and old life insurance companies that can be useful for the purpose of investment.

Financial overview:

Number of policies:

Once the paid up capital of insurance companies are in the same range, number of insurance policies identify the company’s ability to market its schemes and products. Nepal Life Insurance Company Limited (NLIC) has been maintaining a lead position with 12.09 lakhs insurance policies followed by Metlife American Life Insurance Company (ALICO) with 8.11 lakhs policies and Life Insurance Corporation Nepal Limited (LICN) with 7.25 lakhs policies as of second quarter of FY 2075/76.

Among the newly licensed insurance companies, Reliable Nepal Life Insurance Company (RENLICL) is in the lead with 3.24 lakhs policies. Union Life Insurance Company (ULICL) has the second highest number of insurance policies i.e. 1.19 lakhs followed by Citizen Life Insurance Company (CLICL) with 88.81 thousand policies.

However, the executives of all life insurance companies should understand the quality of insurance policies is important rather than number of insurance policies as the component that these companies are dealing with is human life. Moreover, these policies might include foreign employment insurance policies which provides less net premium so few insurance companies do not prefer such policies. Hence, judging an insurance company based only on number of insurance policies would be absurd.

 Net premium:

As of second quarter of this fiscal year, among the infant insurance companies, Union Life Insurance Company (ULICL) has the highest net premium of Rs 1.02 arba. It is followed by Reliable Nepal Life Insurance Company (RENLICL) with net premium of Rs 49.76 crores.

Among the previously registered companies, Nepal Life Insurance Company Limited (NLIC) has the highest net premium amounting to Rs 10.47 arba. It is followed by Life Insurance Corporation (LICN) and Rastriya Beema Sansthan (RBS) with a net premium of Rs 5.78 arba and Rs 4.40 arba.

Life insurance fund

Life insurance fund is considered to be one of the most important factors in the financial statement. This indicator provides an estimate on how much advance preparation has an insurance company done for crisis. If we analyze the insurance fund of second quarter of 2075/76, Nepal Life insurance Company (NLIC) has the highest insurance fund of Rs 56.73 arba. Life Insurance Corporation Nepal (LICN) stands at the second position with a fund of Rs 48.68 arba. National Life Insurance Company Limited (NLICL) is seen in the third position with Rs 23.71 arba in insurance fund.

In context of insurance funds, Union Life insurance Company (ULICL) has the highest insurance fund of Rs 95.33 crores followed by Sun Nepal Life Insurance Company (SNLICL) and IME Life Insurance Company (IMELICL). They have insurance funds of Rs 35.27 crores and Rs 33.66 crores respectively.

Paid up capital:

Nepal Life Insurance Company (NLIC) has the highest paid up capital (Rs 4.40 arba), followed by National Life Insurance Company (NLICL) (Rs 2.65 arba) and Prime Life Insurance Company (Rs 1.78 arba). The old life insurance companies need to meet the paid up capital of Rs 2 arba at the soonest possible.

Among the newly licensed life insurance companies, the company with highest paid up capital is Citizen Life insurance Company (CLICL) with Rs 1.75 arba. Jyoti Life Insurance Company (JLICL), in the second position has the paid up capital of Rs 1.54 arba. Finally, Union Life Insurance Company (ULICL) has a paid up of Rs 1.51 arba. All 9 newly licensed life insurance companies are yet to issue IPO shares to the general public to make minimum paid up capital of Rs 2 arba.

Reserves and surplus:

Nepal Life insurance Company Limited (NLIC) has the highest reserve of Rs 3.73 arba. It is further followed by MetLife American Life Insurance Company (ALICO) with a reserve fund of Rs 1.63 arba. Finally, Prime Life Insurance Company (PLIC) is seen in the third position with a reserve of Rs 97.90 crores.

Reliable Nepal Life Insurance Company (RENLICL) has highest reserve with 27.35 crores followed by Jyoti Life Insurance Company (17.18 crores). In the third place stands Citizen Life Insurance Company Limited (CLICL) with a reserve of Rs 16.11 crores.

Net profit:

Among the life insurance companies, the second quarter report shows that Nepal Life Insurance Company (NLIC) has earned the highest net profit of Rs 28.05 crores. It is further followed by National Life Insurance Company Limited (NLICL) with net profit of Rs 17.12 crores. Finally, Metlife - American Life Insurance Company Limited (ALICO) has a net profit of Rs 12.51 crores.

Among the new life insurance companies, Reliable Nepal Life Insurance Company (RENLICL) with net profit of Rs 9.92 crores. Secondly, Citizen Life Insurance Company Limited (CLICL) reported net profit of Rs 7.02 crores. Sun Nepal Life Insurance Company (SNLICL) has a net profit of Rs 6.53 crores.

The provided net profit figure is not the complete picture. Usually, net profit figure is increased once actuary valuation has been completed. Amount from life insurance fund is transferred to net profit after such valuation. Hence, the amount is likely to escalate.

 Annualized EPS

The insurance company that has won the race of annualized EPS is Surya Life insurance Company (SLICL). The company’s annualized EPS stands at Rs 19.12. Gurans Life Insurance Company (GLICL) is seen in the second place with an EPS of Rs 13.80. Finally, Nepal Life Insurance Company (NLIC) has an EPS of Rs 12.92.

Among the new life insurance companies, Reliable Nepal Life Insurance Company (RENLICL) has the highest EPS of Rs 14.18 followed by Sun Nepal Life Insurance (SNLICL) with an EPS of Rs 9.33. In the third position, we have IME Life Insurance Company Limited (IMELICL) with an EPS of Rs 8.89.

Net worth:

Analyzing the net worth per share, Rastriya Beema Sansthan (RBS) has the highest net worth of Rs 200.81 followed by Nepal Life Insurance Company (NLIC) with net worth of Rs 184.97. In the third place, we have Prime Life Insurance Company (PLIC) with net worth per share of Rs 160.12.

Reliable Nepal Life Insurance Limited (RENLICL) has a net worth of Rs 119.53. Jyoti Life Insurance Company (JLICL) has the net worth per share of Rs 111.16.

P/E ratio:

The insurance company with least P/E ratio is Surya Life Insurance Company Limited (SLICL). Its P/E ratio is 26.77 times. Similarly, Prime Life Insurance Company Limited (PLIC) has a P/E ratio of 41.90 times.

In a nutshell:

Given the study on these life insurance companies, what strengths and opportunities do you think they have in the highly dominated insurance industry? Do you think the new insurance companies will match the pace of the big giant insurance companies? Would you prefer investing in these new insurance companies if the opportunity of investment is granted? Please write in the comment section below.