The new & the old: Nepal Life Insurance leading in seven out of eight & IME Life Insurance leading in four out of eight fundamental indicators

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:

The green box denotes life insurance companies that have been operated since a long period of time while the orange box indicates companies licensed recently. On this note, it is of no wonder that these new insurance companies might soon require funding from public in the form of IPO. 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 investment purpose.

Financial overview:

1. 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. Nepal Life Insurance Company has been maintaining a lead position with 1,112,579 insurance policies followed by National Life Insurance Company Limited (808,029) and Life Insurance Corporation Nepal (707,187) as of third quarter of FY 2074/75.

Among the newly licensed insurance companies, Reliable Nepal Life Insurance Company with 59,351 policies. Union Life insurance Company has the second highest number of insurance policies i.e. 44,365 followed by Citizen life insurance Company with 36,382 policies.

Find the descending order of both old (green colored) and new (orange colored) life insurance companies in terms of no. of insurance policies:

 2. Net premium:

As of third quarter of this fiscal year, among the infant insurance companies, Union Life insurance company has the highest net premium of Rs 39.02 crores. It is followed by IME Life Insurance Company Limited with net premium of Rs 25.59 crores.

 Among the previously registered companies, NLIC has the highest net premium amounting to Rs 10.69 arba. It is followed by Life Insurance Corporation and National Life Insurance Company with a net premium of Rs 6.95 arba and Rs 3.94 arba.

Find the descending order of both old (green colored) and new (orange colored) life insurance companies in terms of no. of net premium:

3. 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 shock can an insurance company be able to absorb at times of crisis. If we analyze the insurance fund of third quarter of 2074/75, Nepal Life insurance Company has the highest insurance fund of Rs 47.68 arba. Life Insurance Corporation stands stands at the second position with a fund of Rs 40.58 arba. National Life Insurance Company is seen in the third position with Rs 20.39 arba in insurance fund.

In context of insurance funds, Union Life insurance has the highest insurance fund has 18.75 crores followed by Jyoti Life Insurance Company and IME Life Insurance Company. JLICL and IMELICL have insurance funds of Rs 9.80 crores and Rs 9.67 crores.

Find the descending order of both old (green colored) and new (orange colored) life insurance companies in terms of paid up capital, reserve and surplus and insurance fund:

4.Paid up capital, reserves and surplus:

Nepal Life Insurance Company has the highest paid up capital (Rs 4.39 arba), followed by National Life Insurance Company (Rs 1.65 arba) and Life Insurance Corporation (Rs 1.3 arba). Among the seven listed life insurance companies, only two life insurance companies have conducted its Annual General Meeting (AGM). The companies which have conducted their AGM are Prime Life Insurance Company and Nepal Life Insurance Company. Asian Life Insurance Company has announced their AGM to be conducted on June 1^st. Remaining four companies such as Gurans Life Insurance, Life Insurance Corporation Nepal, National Life Insurance and Surya Life Insurance Company have not announced their AGM till this day.

Nepal Life insurance Company has the highest reserve of Rs 3.48 arba. It is further followed by Met Life Insurance Company with a reserve fund of Rs 1.47 arba. Finally, Prime Life Insurance Company is seen in the third position with a reserve of Rs 94.8 crore.

Among the newly licensed life insurance companies, the company with highest paid up capital is Citizen Life insurance Company Limited with Rs 1.75 arba. Jyoti Life Insurance Company Limited, in the second position has the paid up capital of Rs 1.54 arba.

 In context of reserves and surplus, IME Life insurance has highest reserve with 14.36 crores followed by Sun Nepal life Insurance Company Limited (12.22 crores). In the third place stands Reliance Life Insurance Company with a reserve of Rs 10.60 crores.

 5. Net profit:

Among the life insurance companies, the third quarter report shows that Nepal Life Insurance has earned the highest net profit of Rs 43.57 crores. It is further followed by National Life Insurance Company Limited with net profit of Rs 22.20 crores. Among the new life insurance companies, IME Life Insurance Company with net profit of Rs 14.88 crores and Sun Nepal Life Insurance Company with Rs 11.64 crores are in the top list.

Find the descending order of both old (green colored) and new (orange colored) life insurance companies in terms of net profit:

6. Annualized EPS

The insurance company that has won the race of annualized EPS is Prime Life insurance Company. The company’s annualized EPS stands at Rs 31.28. However, the other side of the story shows that PLIC has not yet capitalized its recently floated 160% right and 12.5% bonus share so, the EPS is seen to be highest.  Surya Life Insurance Company is seen in the second place with an EPS of Rs 18.06. It has also floated 40% right share so it’s EPS will also fall down. Finally, National Life Insurance Company has an EPS of Rs 17.88.

Among the new life insurance companies, IME Life insurance Company has the highest EPS of Rs 14.18 followed by Sun Nepal life insurance Company with an EPS of Rs 11.09. In the third position, we have Reliance Life Insurance with an EPS of Rs 9.62.

Find the descending of both old (green colored) and new (orange colored) life insurance companies in terms of EPS:

7. Net worth:

Analyzing the net worth per share, NLIC has the highest net worth of Rs 186.55 followed by Surya life Insurance Company with net worth of Rs 155.16. In the third place, we have Prime Life Insurance Company with net worth per share of Rs 146.43.

IME Life Insurance Company has a net worth of Rs 111.40,  Jyoti Life Insurance has the net worth per share of Rs 111.19 and Reliable Nepal Life insurance Company has a net worth of Rs 106.39 among new life insurance companies.

Find the descending of both old (green colored) and new (orange colored) life insurance companies in terms of net worth:

8. Market price:

The market price of these life insurance companies listed in NEPSE is as follows:

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.

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