A Peer To Peer Comparison Between Non Life Insurance Companies; How Did They Perform Individually In Q3?

When we take a careful look at the numbers of non-life insurance, it seems that this sector has been growing at a steady rate. Previously, the business penetration was quite low and was not achieving its full potential but due to the covid-19, it has brought a favorable scenario for the insurance business which can be seen by the increasing numbers.

With the third-quarter report published by all the insurance companies, it is obvious that those with a strong business model and effective marketing strategies have shown better results. So, let's dive into the major indicators of non-life insurance in the third quarter of FY 2078/2079.

Net Profit:

Shikhar Insurance Company Limited (SICL) has reported the highest profit of all its competitors with a total of Rs. 36.70 crores. This is followed by Neco Insurance Company Limited (NIL) and Rastriya Beema Company Limited (RBCL) both have reported a profit of Rs. 34.26 crores respectively. 

Out of 18 non-life insurance companies, 5 companies have reported above industry average net profit while 7 companies have reported a decline in Net profit in this quarter.

Paid-Up Capital:

Shikhar Insurance Company Limited (SICL) has the highest capital amounting to Rs. 1.75 Arba. The list is followed by Neco Insurance Company Limited (NIL) which has the second-highest capital with a total of Rs. 1.52 Arba. Similarly, Siddhartha Insurance Limited (SIL) has a capital of a total of Rs. 1.28 Arba.

Reserve and Surplus:

In terms of Reserve, Rastriya Beema Company Limited (RBCL) has reported the highest reserve with a total of Rs. 3.31 Arba. Similarly, RBCL is followed by Shikhar Insurance Company Limited (SICL) which has reported a total reserve of Rs. 1.13 Arba. Neco Insurance Company Limited (NIL) has reported a reserve of Rs. 62.25 crores.

Insurance Fund:

Insurance funds is that retained fund that the company has collected from its clients. This fund can be used by the company to earn profits for them, however not all the funds. If a client is issued a claim then the company has to use the fund to make the payment.

In terms of the insurance fund, Rastriya Beema Company Limited (RBCL) has the highest fund with a total of Rs. 2.60 Arba. Similarly, Shikhar Insurance Company Limited (SICL) and Neco Insurance Company Limited (NIL) are on the list with a total of Rs. 1.47 Arba and 1.27 Arba respectively.

Net Premium:

Premium is a monthly payment by the client for an insurance policy. Net Premium is the payment that the insurance company retains for the policy. The remaining premium is ceded to the reinsurer which allows them to reduce the risk exposure and the liability.

Neco Insurance Company Limited (NIL) has earned the most premium amounting to Rs. 1.37 Arba. Similarly, this is followed by Shikar Insurance Company Limited (SICL) which has earned a net premium of Rs. 1.13 Arba. Sagarmatha Insurance Company Limited (SIC) has earned a net premium of Rs. 1.09 Arba.

Net Claim Payment:

Net claim payment signifies how much money the company paid in claims over a certain period of time. Rastriya Beema Insurance Company Limited (RBCL) reported the lowest claim payment in this quarter amounting to Rs. 3.24 crores. This is followed by Sanima General Insurance Company Limited (SGI) which paid out Rs. 6.67 crores in claims.

NOTE: Investors always needs to compare apple to apple meaning that when we see the claims that are being paid out, for an example Sanima General has one of the lowest claims, however, it also has one of the lowest premium collection which signifies that the business is still small for Sanima General compared to Shikhar Insurance and other old players.

Number of Policies:

In terms of the number of policies, Neco Insurance Company Limited (NIL) has issued the highest number of policies reaching 237,652 policies. The list is followed by Shikhar Insurance Company Limited (SICL) which has issued a total of 190,799 policies. Similarly, NLG Insurance Company Limited (NLG) has issued a total of 160,637 policies.

The average number of policies stood at 113,724 where 9 companies have reported their policies above the industry average.

Unpaid Claims:

Major Indicators:

Annualized Earning per share:

Rastriya Beema Company Limited (RBCL) has reported the highest annualized earnings per share in this quarter with Rs. 171.36 per share. Sagarmatha Insurance Company Limited (SIL) and Neco Insurance Company Limited (NIL) have reported an EPS of Rs. 34.45 per share and Rs. 30.02 per share respectively.

Net Worth per share:

The highest net worth per share is reported by Rastriya Beema Company Limited (RBCL) at Rs. 2,320.75 per share. RBCL is followed by Sagarmatha Insurance Company Limited (SIC) with a net worth per share of Rs. 271.39 per share. Shikhar Insurance Company Limited (SICL) has reported a net worth of Rs. 255.96 per share making it the third-highest.

The average Net worth per share stood at Rs. 310.59 per share.

Price to Earnings Ratio:

In terms of Price to Earnings ratio, Neco Insurance Company Limited (NIL) has reported the lowest P/E of 29.78 times. Similarly, IME General Insurance Limited (IGI) reported a P/E of 30.13 times. Premier Insurance Company Limited (PIC) has reported the third lowest P/E of 30.42 times.

The lower P/E suggests that the investors have to pay relatively lower for a rupee of earnings than their competitors. The Average P/E stood at 45.92 times whereas 6 companies have reported a P/E below the industry average.

NOTE: The mentioned P/E is calculated based on the price of the qtr end price. So, investors are requested to calculate the P/E based on the current market price to come to a buying decision.

Finally, the below table illustrated the overall picture with the major indicators of 18 non-life insurance companies as of the third quarter of FY 2078/2079.