Market Capitalization Of Non-Life (General) Insurance Companies In Nepal

August 30, 2021 | Investopaper

The market capitalization of a company refers to the total market value of the outstanding shares of that company. So, basically the market capitalization (also known as market cap) of a company is obtained by multiplying the market price per share to the number of outstanding shares of that company. This calculation will help you to determine the size and the strength of the company in the market.


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Market capitalization can be helpful to diversify your portfolio because it is essential to pick different sized companies to minimize the risk associated with your investment. In order to compute the market capitalization of a company, we should know the current market price and the total listed shares of the company.

There are currently 20 non-life (general insurance companies operating in Nepal. Out of the 20 companies, two (National and Oriental) are the branches of foreign insurance companies. Hence, they are not traded in Nepal Stock Exchange (NEPSE) and have no quoted market price. Here, we will compute the market value of the remaining 18 non life insurance companies.


Also Read:

List of Insurance Companies In Nepal

History Of Insurance In Nepal


Total Number of Shares Of Non-Life (General) Insurance Companies

S.N Non-Life Insurance Companies In Nepal Paid-Up Capital (Rs In Crores) Total Listed Shares (in Lakhs)
1 Shikhar Insurance Company Limited 175.85 175.85
2 Neco Insurance Company Limited 152.16 152.16
3 Nepal Insurance Company Limited 124.23 124.23
4 NLG Insurance Company Limited 120.6 120.6
5 Lumbini General Insurance Company Limited 119.88 119.88
6 Everest Insurance Company Limited 118.36 118.36
7 Prabhu Insurance Company Limited 116.19 116.19
8 IME General Insurance Company Limited 115.75 115.75
9 Siddhartha Insurance Company Limited 112 112
10 Sagarmatha Insurance Company Limited 111.13 111.13
11 Prudential Insurance Company Limited 110.85 110.85
12 Himalayan General Insurance Company Limited 110.03 110.03
13 Premier Insurance Company Limited 104.75 104.75
14 United Insurance Company Limited 102.81 102.81
15 Ajod Insurance Company Limited 100 100
16 General Insurance Company Limited 100 100
17 Sanima General Insurance Company Limited 100 100
18 Rastriya Beema Company 26.66 26.66
19 National Insurance Company Limited
20 Oriental Insurance Company Limited

Source: Unaudited Fourth Quarterly Report, FY 2077/78

Note: National Insurance and Oriental Insurance are the branches of foreign insurance companies. Hence, they have no capital. 


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Market Capitalization Of Non-Life (General) Insurance Companies In Nepal

S.N Non-Life Insurance Companies In Nepal Total Listed Shares (in Lakhs) Market Share Price (Rs) Market Capitalization (Rs ‘Arba’)
1 Rastriya Beema Company 26.66 19900 53.05
2 Shikhar Insurance Company Limited 175.85 1969 34.62
3 Neco Insurance Company Limited 152.16 1491 22.69
4 Sagarmatha Insurance Company Limited 111.13 1441.1 16.01
5 IME General Insurance Company Limited 115.75 1211 14.02
6 Premier Insurance Company Limited 104.75 1270 13.30
7 NLG Insurance Company Limited 120.6 1079 13.01
8 Nepal Insurance Company Limited 124.23 1003 12.46
9 Siddhartha Insurance Company Limited 112 1100 12.32
10 Prabhu Insurance Company Limited 116.19 966 11.22
11 Lumbini General Insurance Company Limited 119.88 838 10.05
12 Everest Insurance Company Limited 118.36 799.5 9.46
13 Himalayan General Insurance Company Limited 110.03 815 8.97
14 Prudential Insurance Company Limited 110.85 805 8.92
15 Ajod Insurance Company Limited 100 820 8.20
16 United Insurance Company Limited 102.81 780 8.02
17 Sanima General Insurance Company Limited 100 735 7.35
18 General Insurance Company Limited 100 724.3 7.24
19 National Insurance Company Limited
20 Oriental Insurance Company Limited

Note:

The market share price is taken from Nepal Stock Exchange (NEPSE) dated August 30, 2021 [Bhadra 13, 2078 BS]. At current the share price as well as market capitalization may vary.

Since, the shares of National Insurance and Oriental Insurance are not traded in NEPSE, the market price is unknown. Hence, the market capitalization of these companies could not be computed. 


Conclusion

From the above table, we see that Rastriya Beema Company (RBCL) has the highest market value among the general insurance companies with Rs 53.05 Arba. Shikhar Insurance (SICL) is second to RBCL with the total market capitalization of Rs 34.62 Arba. Neco Insurance (NIL) is the third largest general insurance in terms of market cap with Rs 22.69 Arba. General Insurance (GIC) has the lowest market cap of Rs 7.24 Arba.

Looking into the total market capitalization is a more accurate way of pricing of companies rather than market share price. This helps you to understand which companies are under priced and which are overpriced. Just because a company has a higher share price doesn’t mean it has larger market capitalization.

All other things (business volume, profitability, market share etc.) remaining same, you would be better off if you purchased the share of the company with lower market capitalization. Lower market value, in this case, means relatively under priced as compared to its competitors.


Suggested Readings:

Financial Analysis of Commercial Banks of Nepal [With Ranking]

Top 5 Non-Life Insurance in Nepal

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