Find out the quarterly status of life insurance companies! An exclusive comparative analysis!

The life insurance companies have published their first 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. Metlife - American Life Insurance Company Limited (ALICO)  maintains a lead position with 12.64 lakhs insurance policies followed by Nepal Life Insurance Company Limited (NLIC) ) with 12.39 lakhs policies and Life Insurance Corporation Nepal Limited (LICN) with 7.49 lakhs policies as of first quarter of FY 2076/77.

Among the newly licensed insurance companies, Reliable Nepal Life Insurance Company (RENLICL) is in the lead with 11.33 lakhs policies. Prabhu Life Insurance Limited (PRLIL)  has the second highest number of insurance policies i.e. 4.53 lakh followed by Union Life Insurance Company Limited (ULICL) with 1.46 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 first quarter of this fiscal year, among the new life insurance companies, Union Life Insurance Company (ULICL) has the highest net premium of Rs 77.82 crores. It is followed by Reliable Nepal Life Insurance Company (RENLICL) with net premium of Rs 38.76 crores.

Among the previously registered companies, Nepal Life Insurance Company Limited (NLIC) has the highest net premium amounting to Rs 7.81 arba. It is followed by Life Insurance Corporation (LICN) and Rastriya Beema Sansthan (RBS) with a net premium of Rs 4.17 arba and Rs 4.09 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 in first quarter of 2076/77, Nepal Life insurance Company (NLIC) has the highest insurance fund of Rs 72.33 arba. Life Insurance Corporation Nepal (LICN) stands at the second position with a fund of Rs 57.80 arba. National Life Insurance Company Limited (NLICL) is seen in the third position with Rs 28.64 arba in insurance fund.

In context of insurance funds, Union Life insurance Company (ULICL) has the highest insurance fund of Rs 2.49 arba followed by Jyoti Life Insurance Company (JLICL) and IME Life Insurance Company Limited (IMELICL). They have insurance funds of Rs 91.47 crores and Rs 82.03 crores 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 3.01 arba) and Asian Life Insurance Company Limited (ALICL) (Rs 2.01 arba). The old life insurance companies need to meet the paid up capital of Rs 2 arba at the soonest possible. Note that SLICL has already issued 70% right share of worth Rs 88.74 crore. After this adjustment, the total paid up of SLICL will be Rs 215.8 crore.

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 2.64 arba. It is further followed by MetLife American Life Insurance Company (ALICO) with a reserve fund of Rs 2.16 arba. Finally, Prime Life Insurance Company (PLIC) is seen in the third position with a reserve of Rs 1.03 arba.

Reliable Nepal Life Insurance Company (RENLICL) has highest reserve with Rs 49.95 crores followed by Union Life Insurance Company Limited (ULICL) (45.52 crores). In the third place stands Citizen Life Insurance Company (CLICL) with a reserve of Rs 37.50 crores.

Net profit:

Among the life insurance companies, the first quarter report shows that Nepal Life Insurance Company (NLIC) has earned the highest net profit of Rs 20.44 crores. It is further followed by National Life Insurance Company Limited (NLICL) with net profit of Rs 11.54 crores. Finally, Prime Life Insurance Company Limited (PLIC) has a net profit of Rs 10.03 crores.

Among the new life insurance companies, Union Life Insurance Company (ULICL) with net profit of Rs 10.45 crores. Secondly, Reliable Nepal Life Insurance Company (RENLICL) reported net profit of Rs 5.81 crores. Citizen Life Insurance Company Limited (CLICL) has a net profit of Rs 5.01 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 Surya Life Insurance Company Limited (SLICL). The company’s EPS stands at Rs 24.86. Prime Life Insurance Company Limited (PLIC) is seen in the second place with an EPS of Rs 19.97. Finally, National Life Insurance Company (NLICL) has an EPS of Rs 15.35.

Among the new life insurance companies, Union Life Insurance Company (ULICL)  has the highest EPS of Rs 27.78 followed by Reliable Nepal Life Insurance Limited (RENLICL) with an EPS of Rs 16.61. In the third position, we have Citizen Life Insurance Company Limited (CLICL) with an EPS of Rs 11.46.

Net worth:

Analyzing the net worth per share, Rastriya Beema Sansthan (RBS) has the highest net worth of Rs 203.45 followed by Prime Life Insurance Company (PLIC) with net worth of Rs 158.00. In the third place, we have Nepal Life Insurance Company (NLIC) with net worth per share of Rs 156.69.

Reliable Nepal Life Insurance Company Limited (RENLICL) has a net worth of Rs 135.68. Union Life Insurance Company Limited (ULICL) has the net worth per share of Rs 130.25.

P/E ratio:

The insurance company with least P/E ratio is Surya Life Insurance Company Limited (SLICL). Its P/E ratio is 10.38 times. Similarly, Prime Life Insurance Company Limited (PLIC) has a P/E ratio of 16.12 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.