Life insurance companies were able to issue more than 75 lakhs insurance policies amidst the pandemic! Find our comparative analysis

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

Financial overview:

Number of policies:

The number of insurance policies reflects the company’s ability to market its schemes and products. Nepal Life Insurance Company Limited maintains a lead position with 13.04 lakh insurance policies followed by Met Life American Insurance Company Limited (ALICO) with 11.01 lakhs policies and National Life Insurance Company Limited (NLICL) with 8.10 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 17.51 lakhs policies. Reliable Nepal’s number of insurance policies is high due to the inclusion of Foreign Employment insurance policies. Union Life Insurance Company Limited (ULICL) has the second-highest number of insurance policies i.e. 2.78 lakhs followed by Citizen Life Insurance Company (CLICL)  with 1.24 lakh policies.

However, investors of all life insurance companies should understand the quality of insurance policies is important rather than a number of insurance policies. Moreover, these policies might include schemes 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 a number of insurance policies would be absurd.

Net premium:

As of the fourth  quarter of last fiscal year, among the old life insurance companies, Nepal Life Insurance Company (NLIC) has the highest net premium of Rs 27.34 arba. It is followed by Life Insurance Corporation Nepal Limited (LICN) with a net premium of Rs 14.83 arba.

Among the newly registered companies, Union Life Insurance Limited (ULICL) has the highest net premium amounting to Rs 4.50 arba. It is followed by Citizen Life Insurance Company Limited (CLICL)  and Jyoti Life Insurance Company Limited (JLICL) with a net premium of Rs 1.92 arba and 1.78 arba respectively.

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 of how much advance preparation has an insurance company done for the crisis. If we analyze the insurance fund in the fourth quarter of 2076/77, Nepal Life insurance Company (NLIC) has the highest insurance fund of Rs 87.02 arba. Life Insurance Corporation Nepal (LICN) stands at the second position with a fund of Rs 67.70 arba. National Life Insurance Company Limited (NLICL) is seen in the third position with Rs 33.72 arba in the insurance fund.

In the context of insurance funds, Union Life insurance Company (ULICL) has the highest insurance fund of Rs 4.28 arba followed by Jyoti Life Insurance Company (JLICL) and Citizen Life Insurance Company Limited (CLICL). They have insurance funds of Rs 1.97 arba and Rs 1.67 arba respectively.

Paid-up capital:

Nepal Life Insurance Company (NLIC) has the highest paid up capital (Rs 5.49 arba), followed by National Life Insurance Company (NLICL) (Rs 3.08 arba) and Prime Life Insurance Company Limited (PLIC) (Rs 2.25 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 3.50 arba. It is further followed by MetLife American Life Insurance Company (ALICO) with a reserve fund of Rs 2.43 arba. Finally, National Life Insurance Company (NLICL) is seen in the third position with a reserve of Rs 1.03 arba.

Reliable Nepal Life Insurance Company (RENLICL) has the highest reserve with Rs 64.02 crores followed by Citizen Life Insurance Company Limited (CLICL) (Rs 49.62 crores). In the third place stands Union Life Insurance Company (ULICL) with a reserve of Rs 44.86 crores.

Net profit:

Among the life insurance companies, the fourth-quarter report shows that Nepal Life Insurance Company (NLIC) has earned the highest net profit of Rs 53.04 crores. It is further followed by National Life Insurance Company Limited (NLICL) with net profit of Rs 39.12 crores. Finally,  Metlife - American Life Insurance Company Limited (ALICO) has a net profit of Rs 32.80 crores.

Among the new life insurance companies, Reliable Nepal Life Insurance Company (RENLICL) with net profit of Rs 21.44 crores. Secondly, Citizen Life Insurance Company Limited (CLICL) reported net profit of Rs 20.07 crores. IME Life Insurance Company Limited (IMELICL) has a net profit of Rs 12.91 crores.

The provided net profit figure is not the complete picture. Usually, the net profit figure is increased once the actuarial valuation has been completed. The 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 32.63. Prime Life Insurance Company Limited (PLIC) is seen in the second place with an EPS of Rs 13.22. Finally, National Life Insurance Company Limited (NLICL) has an EPS of Rs 12.69.

Among the new life insurance companies, Reliable Nepal Life Insurance Company (RENLICL) has the highest EPS of Rs 15.31 followed by Citizen Life Insurance Company Limited (CLICL) with an EPS of Rs 11.47. In the fourth position, we have IME Life Insurance Company Limited (IMELICL) with an EPS of Rs 9.22.

Net worth:

Analyzing the net worth per share Rastriya Beema Sansthan (RBS) has the highest net worth of Rs 257.91 followed by Nepal Life Insurance Company (NLIC)   with net worth of Rs 173.92. In the third place, we have Prime Life Insurance Company (PLIC)  with net worth per share of Rs 145.56.

Reliable Nepal Life Insurance Company Limited (RENLICL) has a net worth of Rs 149.82. Union Life Insurance Company Limited (ULICL) has the net worth per share of Rs 133.12.

P/E ratio:

The insurance company with least P/E ratio is Surya Life Insurance Company Limited (SLICL). Its P/E ratio is 36.74 times. Similarly, Prime Life Insurance Company Limited (PLIC) has a P/E ratio of 40.18 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.