Comparative study of life insurance companies in second quarter; Nepal life Insurance and Union Life Insurance have the highest profit among old and new life insurance companies

The life insurance companies have published their second quarter financial reports. Let’s look on the basis of each indicator:

Financial overview:

Number of policies:

Number of insurance policies reflects the company’s ability to market its schemes and products. Nepal Life Insurance Company Limited (NLIC) maintains a lead position with 12.58 lakhs insurance policies followed by Metlife - American Life Insurance Company Limited (ALICO) with 12.49 lakhs policies and National Life Insurance Company Limited (NLICL) with 8.04 lakhs policies as of fourth quarter of FY 2076/77.

Among the newly licensed insurance companies, Reliable Nepal Life Insurance Company (RENLICL) is in the lead with 19.92 lakhs policies. Reliable Nepal’s number of insurance policies is high due to inclusion of Foreign Employment insurance policies. Union Life Insurance Company Limited (ULICL) has the second highest number of insurance policies i.e. 2.51 lakh followed by Citizen Life Insurance Company Limited (CLICL)  with 1.13 lakh policies.

However, investors of all life insurance companies should understand the quality of insurance policies is important rather than number of insurance policies. Moreover, these policies might include scheme such as foreign employment insurance policy which provides less net premium so some 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 old life insurance companies, Nepal Life Insurance Company (NLIC) has the highest net premium of Rs 13.91 arba. It is followed by Life Insurance Corporation Nepal Limited (LICN) with net premium of Rs 7.65 arba.

Among the newly registered companies, Union Life Insurance Company Limited (ULICL) has the highest net premium amounting to Rs 2.37 arba. It is followed by Reliable Nepal Life Insurance Limited (RENLICL) and Citizen Life Insurance Company Limited (CLICL) with a net premium of Rs 86.12 crores and 79.37 crores.

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 in second quarter of 2076/77, Nepal Life insurance Company (NLIC) has the highest insurance fund of Rs 77.59 arba. Life Insurance Corporation Nepal (LICN) stands at the second position with a fund of Rs 61.09 arba. National Life Insurance Company Limited (NLICL) is seen in the third position with Rs 30.15 arba in insurance fund.

In context of insurance funds, Union Life insurance Company (ULICL) has the highest insurance fund of Rs 3.37 arba followed by Jyoti Life Insurance Company (JLICL) and Sun Nepal Life Insurance Company Limited (SNLICL). They have insurance funds of Rs 1.20 arba and Rs 1.16 arba respectively.

Paid up capital:

Nepal Life Insurance Company (NLIC) has the highest paid up capital (Rs 5.50 arba), followed by National Life Insurance Company (NLICL) (Rs 3.08 arba) and Surya Life Insurance Company Limited (SLICL) (Rs 2.16 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 2.61 arba. It is further followed by MetLife American Life Insurance Company (ALICO) with a reserve fund of Rs 2.21 arba. Finally, Prime Life Insurance Company (PLIC) is seen in the third position with a reserve of Rs 1.04 arba.

Reliable Nepal Life Insurance Company (RENLICL) has highest reserve with Rs 56.66 crores followed by Union Life Insurance Company Limited (ULICL) (56.27 crores). In the third place stands Citizen Life Insurance Company (CLICL) with a reserve of Rs 42.01 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 35.09 crores. It is further followed by National Life Insurance Company Limited (NLICL) with net profit of Rs 23.59 crores. Finally, Prime Life Insurance Company Limited (PLIC) has a net profit of Rs 15.61 crores.

Among the new life insurance companies, Union Life Insurance Company Limited (ULICL) with net profit of Rs 22.39 crores. Secondly, Reliable Nepal Life Insurance Company (RENLICL) reported net profit of Rs 13.26 crores. Citizen Life Insurance Company Limited (CLICL) has a net profit of Rs 10.03 crores.

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

EPS:

The insurance company that has won the race of EPS is Rastriya Beema Sansthan (RBS). The company’s EPS stands at Rs 39.06. Gurans Life Insurance Company Limited (GLICL) is seen in the second place with an EPS of Rs 15.67. Finally, Prime Life Insurance Company Limited (PLIC) has an EPS of Rs 15.54.

Among the new life insurance companies, Union Life Insurance Company Limited (ULICL) has the highest EPS of Rs 29.75 followed by Reliable Nepal Life Insurance Company (RENLICL) with an EPS of Rs 18.94. In the third position, we have Citizen Life Insurance Company Limited (CLICL) with an EPS of Rs 11.47.

Net worth:

Analyzing the net worth per share Rastriya Beema Sansthan (RBS) has the highest net worth of Rs 244.82 followed by Prime Life Insurance Company (PLIC) with net worth of Rs 158.46. In the third place, we have Nepal Life Insurance Company (NLIC) with net worth per share of Rs 156.24.

Reliable Nepal Life Insurance Company Limited (RENLICL) has a net worth of Rs 143.98. Union Life Insurance Company Limited (ULICL) has the net worth per share of Rs 141.54.

P/E ratio:

The insurance company with least P/E ratio is Surya Life Insurance Company Limited (SLICL). Its P/E ratio is 24.11 times. Similarly, Prime Life Insurance Company Limited (PLIC) has a P/E ratio of 26.70 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.