Which life insurance in which position? Did any life insurance break the record of Nepal life Insurance Company?

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 benefited 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, ten new life insurance companies got licensed and also came into operation after the paid up capital was hiked.

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 12.39 lakhs insurance policies followed by Life Insurance Corporation Nepal Limited (LICN) with 7.10 lakhs policies and National Life Insurance Company Limited (NLICL) with 7.08 lakhs policies as of third quarter of FY 2075/76.

Among the newly licensed insurance companies, Reliable Nepal Life Insurance Company (RENLICL) is in the lead with 4.49 lakhs policies. Union Life Insurance Company (ULICL) has the second highest number of insurance policies i.e. 1.25 lakhs followed by IME Life Insurance Company (IMELICL) with 72.04 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 third quarter of this fiscal year, among the infant insurance companies, Union Life Insurance Company (ULICL) has the highest net premium of Rs 1.62 arba. It is followed by Reliable Nepal Life Insurance Company (RENLICL) with net premium of Rs 88.57 crores.

Among the previously registered companies, Nepal Life Insurance Company Limited (NLIC) has the highest net premium amounting to Rs 15.19 arba. It is followed by Life Insurance Corporation (LICN)and Rastriya Beema Sansthan (RBS) with a net premium of Rs 8.79 arba and Rs 5.63 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 third quarter of 2075/76, Nepal Life insurance Company (NLIC) has the highest insurance fund of Rs 59.46 arba. Life Insurance Corporation Nepal (LICN) stands at the second position with a fund of Rs 51.48 arba. National Life Insurance Company Limited (NLICL) is seen in the third position with Rs 25.22 arba in insurance fund.

In context of insurance funds, Union Life insurance Company (ULICL) has the highest insurance fund of Rs 1.27 arba followed by Sun Nepal Life Insurance Company (SNLICL) and Jyoti Life Insurance Company (JLICL). They have insurance funds of Rs 49.00 crores and Rs 48.24 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 3.01 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 10 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 5.61 arba. It is further followed by MetLife American Life Insurance Company (ALICO) with a reserve fund of Rs 1.71 arba. Finally, Prime Life Insurance Company (PLIC) is seen in the third position with a reserve of Rs 1.11 arba.

Reliable Nepal Life Insurance Company (RENLICL) has highest reserve with 38.98 crores followed by Citizen Life Insurance Company Limited (CLICL) (21.11 crores). In the third place stands Jyoti Life Insurance Company (JLICL) with a reserve of Rs 20.45 crores.

Net profit:

Among the life insurance companies, the third quarter report shows that Nepal Life Insurance Company (NLIC) has earned the highest net profit of Rs 46.72 crores. It is further followed by National Life Insurance Company Limited (NLICL) with net profit of Rs 30.60 crores. Finally, Metlife - American Life Insurance Company Limited (ALICO) has a net profit of Rs 20.46 crores.

Among the new life insurance companies, Reliable Nepal Life Insurance Company (RENLICL) with net profit of Rs 15.42 crores. Secondly, Citizen Life Insurance Company Limited (CLICL) reported net profit of Rs 12.14 crores. Union Life Insurance Company (ULICL) has a net profit of Rs 10.60 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 16.15. Nepal Life Insurance Company (NLIC) is seen in the second place with an EPS of Rs 14.17. Finally, National Life Insurance Company (NLICL) has an EPS of Rs 13.57.

Among the new life insurance companies, Reliable Nepal Life Insurance Company (RENLICL) has the highest EPS of Rs 14.69 followed by Sun Nepal Life Insurance (SNLICL) with an EPS of Rs 9.57. In the third position, we have Union Life Insurance Company Limited (ULICL) with an EPS of Rs 9.39.

Net worth:

Analyzing the net worth per share, Nepal Life Insurance Company (NLIC) has the highest net worth of Rs 237.56 followed by Rastriya Beema Sansthan (RBS) with net worth of Rs 203.10. In the third place, we have Prime Life Insurance Company (PLIC) with net worth per share of Rs 168.33.

Sun Nepal Life Insurance Limited (SNLICL) has a net worth of Rs 147.97. Mahalaxmi Life Insurance Company (MLICL) has the net worth per share of Rs 139.97.

P/E ratio:

The insurance company with least P/E ratio is Surya Life Insurance Company Limited (SLICL). Its P/E ratio is 36.22 times. Similarly, Prime Life Insurance Company Limited (PLIC) has a P/E ratio of 38.18 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.