Siddhartha Insurance: Financial Performance Analysis 2076
July 10, 2019 | Investopaper
The financial analysis of Siddhartha Insurance Company as performed by the Investopaper team is as follows:
Introduction of Siddhartha Insurance
Siddhartha Insurance Company is one of the leading non-life insurance company of Nepal. It occupies the third spot in terms of the total premium collection (based on fiscal year 2074/75). Siddhartha Insurance was established on Chaitra 23, 2076 ( 5 April 2006). Currently, the company has 74 branches across Nepal. The head office is located at Siddhartha Insurance Bhawan, Babarmahal, Kathmandu.
The company offers different insurance products such as:
—Fire Insurance
—Marine Insurance
—Engineering Insurance
—Health Insurance
—Vehicle(Motor) Insurance
—Aviation Insurance
—Agriculture and Cattle Insurance
—Micro-insurance
Board of directors and the Management team of Siddhartha Insurance
Mr. Ratan Lal Kedia is the chairman of the board of Siddhartha Insurance. The board of directors includes:
| Board Members | Post |
| Mr. Ratan Lal Kedia | Chairman |
| Mr. Rameshwar Prasad Basyal | Director |
| Mr. Pawan Kumar Agrawal | Director |
| Mr. Sumit Kumar Kedia | Director |
| Mr. Nidan Raj Lamichhane | Director |
| Mr. Rahul Agrawal | Director |
Siddhartha Insurance is led by Mr. Birendra Baidawar Chhetry, who is the Chief Executive Officer (CEO) of the company. The management team includes:
| Management Team | Post |
| Mr. Birendra Baidawar Chhetry | Chief Executive Officer |
| Mr.Yogesh Krishna Shrestha | Deputy CEO |
| Mr. Murari Regmi | Deputy General Manager |
| Mr. Deepak Dhoot | Assistant General Manager |
| Mr. Nawaraj Parajuli | Chief Manager |
| Mr. Manoj Dhaurali | CFO |
Shareholding Structure of Siddhartha Insurance
Siddhartha Insurance is purely promoted by Nepalese citizens and institutions. The promoters possess 51 percent of the share. Out of 51 percent, Nepalese citizens hold a 27.96 percent share of the company. Similarly, Institutions have 23.04 percent of the company.
Likewise, ordinary shareholders or the general public possess 49 percent of the company.
| Ownership Structure | Percentage (%) |
| Promoter shareholders | 51 |
| Nepalese Institutions | 23.04 |
| Nepalese Citizens | 27.96 |
| Ordinary shareholders(General public) | 49 |
| Total | 100 |
Number of Branches and Staffs of Siddhartha Insurance
At present, Siddhartha Insurance is operating through its 74 branches all over Nepal. The expansion of branches started after the fiscal year 2072/73. In that year, the company had only 21 branches. It doubled next year to 42. Likewise, at the end of the fiscal year 2074/75, the number of branches increased to 55. Similarly, at the end of the last fiscal year, Siddhartha Insurance had 252 employees working in the company.
| Fiscal Year | No. of branches | No. of Staffs |
| 2070/71 | 17 | 149 |
| 2071/72 | 17 | 163 |
| 2072/73 | 21 | 212 |
| 2073/74 | 42 | 234 |
| 2074/75 | 55 | 252 |
Financial Analysis of Siddhartha Insurance: Last 5 Years
Paid-up Capital and Shareholders’ Fund of Siddhartha Insurance
Siddhartha Insurance has met the paid-up capital of Rs. 1 Arba after the issue of 15.48 percent bonus share this year. The company has gradually increased its capital through the issue of bonus and right share. In the fiscal year 2070/71, the paid-up capital stood at Rs. 25.08 crores. Likewise, the capital has grown by almost four-fold in the last five years. As of 2074/75, the paid-up capital stood at Rs. 64.14 crores. Until the third quarter of this fiscal year, the capital rose to Rs. 86.59 crores. However, after the adjustment of the current bonus share, the capital reaches above Rs. 1 Arba.
Similarly, the shareholders’ fund has also grown by almost four-fold during this period. Siddhartha Insurance has a shareholders fund of Rs. 186.57 crores until the third quarter of this fiscal year (2075/76). The fund stood at Rs. 47.42 crores in the fiscal year 2070/71. It gradually increased to Rs. 144.12 crores at the end of fiscal year 2074/75.
The table below shows the growth of Paid-up Capital and Shareholders’ fund of Siddhartha Insurance in the last 5 years period:
| Fiscal Year | Paid-up capital (Rs. ‘ crores’) | Shareholders Fund (Rs. ‘ crores’) |
| 2070/71 | 25.08 | 47.42 |
| 2071/72 | 27.59 | 65.74 |
| 2072/73 | 34.49 | 83.8 |
| 2073/74 | 53.39 | 113.59 |
| 2074/75 | 64.14 | 144.12 |
Paid-up capital of Siddhartha Insurance in the last five years: In the chart
Investments made by Siddhartha Insurance
Investment is one of the important aspects of the insurance business. The collected premium when invested wisely can generate handsome returns to the company. The investment portfolio of Siddhartha Insurance includes short-term and long-term investments. The total investment stands at Rs. 221.32 crores until the third quarter of this fiscal year. This is a rise of more than 3 fold from 2070/71. At the end of the fiscal year 2070/71, the total investment stood at Rs. 70.72 crores. With the rise in the shareholders’ fund and the premium collection, the investment amount has also grown satisfactorily. The company had Rs. 189.43 crores investment at the end of fiscal year 2074/75.
The growth of investment of Siddhartha Insurance in the last five years period is shown in the table below:
| Fiscal Year | Investments (Rs. ‘ crores’) |
| 2070/71 | 70.72 |
| 2071/72 | 99.08 |
| 2072/73 | 97.24 |
| 2073/74 | 147.39 |
| 2074/75 | 189.43 |
Investments by Siddhartha Insurance in the last five years: In the chart
Number of Insurance Policies of Siddhartha Insurance
Siddhartha Insurance has 145,620 insurance policies at the end of the fiscal year 2074/75. The number of policies stood at 86,470 in the fiscal year 2070/71. Until the third quarter of the current fiscal year, the company has already sold 89,783 policies.
The number of insurance policies issued by Siddhartha Insurance in the last five years is shown in the table below:
| Fiscal Year | No. of Policies |
| 2070/71 | 86,470 |
| 2071/72 | 95,232 |
| 2072/73 | 105,782 |
| 2073/74 | 124,004 |
| 2074/75 | 145,620 |
Number of Insurance policies of Siddhartha Insurance in the last five years: In the chart
Total Premium Income and Net Premium Income of Siddhartha Insurance
The major objective of the Insurance company is to collect the premium and cover the risks of the insured. Insurance companies compete with one another to increase their market share in the premium collection. Siddhartha Insurance ranked number three among general insurance companies in terms of total premium collection. The company collected a total premium of Rs. 178.93 crores in the fiscal year 2074/75. In the nine months of this fiscal year, the company has already accumulated the total premium of Rs. 134.34 crores. In 2070/71, the company had a total premium collection of Rs. 82.01 crores.
Similarly, Siddhartha Insurance has collected a net premium of Rs. 61.96 crores in the 9 months of this fiscal year. The insurance company collected Rs. 88.64 crores in the fiscal year 2074/75. The growth in net premium is more than two and a half fold during the last 5 years. In fiscal year 2070/71, the net premium stood at just Rs. 34.29 crores.
The growth of Total Premium Income and Net Premium Income of Siddhartha Insurance in the last 5 years is shown in the table below:
| Fiscal Year | Total Premium Income (Rs. ‘ crores’) | Net Premium Income (Rs. ‘ crores’) |
| 2070/71 | 82.01 | 34.29 |
| 2071/72 | 97.22 | 46.99 |
| 2072/73 | 116.58 | 56.92 |
| 2073/74 | 150.26 | 70.58 |
| 2074/75 | 178.93 | 88.64 |
Total Premium Income of Siddhartha Insurance in the last five years: In the chart
Net Profit, Earnings Per Share (EPS) and Networth Per Share of Siddhartha Insurance
Siddhartha Insurance has grown its net profit by almost two and a half times from 2070/71 to 2074/75. The net profit stood at Rs. 12.05 crores in the fiscal year 2071/71. The profit grew to Rs. 29.53 crores in the last fiscal year (2074/75). Likewise, insurance has made a profit of Rs. 18.10 crores until the third quarter of this fiscal year.
Due to the rise in profit along with the capital, the company has maintained stable Earnings Per Share (EPS). The EPS of Siddhartha Insurance has ranged from Rs. 42 to Rs. 62 in the last five years. The insurance recorded the highest EPS of Rs. 61.62 in the fiscal year 2071/72. However, maintaining the EPS above Rs. 40 seems a daunting task for the management, after the capital increment above Rs. 1 Arba. In the third quarter of this fiscal year, the annualized EPS has dropped to Rs. 27.87.
Similarly, the net-worth per share of Siddhartha Insurance has revolved around Rs. 200. The company recorded the highest net-worth of Rs. 243 in the fiscal year 2072/73. Likewise, in 2070/71, the net-worth per share stood at Rs. 189.07. Based on the third-quarter report of this fiscal year, net-worth per share stands at Rs. 215.46. This is likely to decline after the adjustment of the current bonus share.
The Net profit, EPS, Net-worth Per Share of Siddhartha Insurance in the last five years is shown in the table below:
| Fiscal Year | Net Profit (Rs. ‘ crores’) | Earnings Per Share (Rs.) | Networth Per Share (Rs.) |
| 2070/71 | 12.05 | 48.05 | 189.07 |
| 2071/72 | 16.99 | 61.62 | 238.28 |
| 2072/73 | 18.61 | 53.96 | 243 |
| 2073/74 | 22.44 | 42.05 | 212.83 |
| 2074/75 | 29.53 | 46.03 | 224.69 |
Net Profit of Siddhartha Insurance in the last five years: In the chart
Dividend History of Siddhartha Insurance
The insurance board of Nepal directed the non-life insurance companies to meet the minimum capital of Rs. 1 Arba. Due to this, Siddhartha Insurance has consistently provided a bonus share to the shareholders. In the last five years period, it has provided a bonus share along with cash dividend for tax purposes only. The bonus share has ranged from 10 percent to 30 percent. In 2072/73, the company provided a bonus share of 30 percent. Likewise, in 2070/71, it distributed a bonus share of 10 percent only. From the profit of 2074/75, the insurance announced a 15.48 percent bonus share to its shareholders.
The dividend history of Siddhartha Insurance in the last five years are shown in the table below:
| Fiscal Year | Bonus (%) | Cash (%) | Total (%) |
| 2070/71 | 10 | 0.526 | 10.526 |
| 2071/72 | 25 | 1.31 | 26.31 |
| 2072/73 | 30 | 1.578 | 31.578 |
| 2073/74 | 20 | 1.053 | 21.053 |
| 2074/75 | 15.48 | – | 15.48 |
Dividend History of Siddhartha Insurance in the last five years: In the chart
Market Price and Market Capitalization of Siddhartha Insurance
Siddhartha Insurance had the highest market capitalization of Rs. 8.69 Arba in the fiscal year 2072/73. The market price was Rs. 2,520 per share during that period. The market valuation increased by more than four-fold from 2070/71 to 2072/73. In the fiscal year 2070/71, the market capitalization stood at Rs. 2.01 Arba. In this time period, the market price was Rs. 800 per share. However, after peaking in fiscal year 2072/73, the market value declined gradually and stood at Rs. 4.43 Arba at the end of the fiscal year 2074/75. As of today, the market capitalization of the company stands at Rs. 4.51 Arba. The current market price (Ashad 24, 2076) is Rs. 451.
The market price and market capitalization of Siddhartha Insurance in the last five years are shown in the table below:
| Fiscal Year | Market Price Per Share (Rs.) | Market Capitalization (Rs. ‘Arba’) |
| 2070/71 | 800 | 2.01 |
| 2071/72 | 649 | 1.79 |
| 2072/73 | 2,520 | 8.69 |
| 2073/74 | 1,500 | 8.01 |
| 2074/75 | 690 | 4.43 |
| Current (Ashad 24, 2076) | 451 | 4.51 |
Market Capitalization of Siddhartha Insurance in the last five years: In the chart
Financial Analysis of Siddhartha Insurance: Third Quarter, 2075/76
Total Premium and Net Premium Collection
The performance of Siddhartha Insurance in the third quarter is relatively sluggish as compared to the growth in previous years. The total premium collected has increased marginally by 3.67 percent. Siddhartha Insurance has collected Rs. 134.34 crores in total premium until the third quarter of this year. Last year, the total premium collection stood at Rs. 129.59 crores in the third quarter. Likewise, the net premium has declined by 5.66 percent in the third quarter. The insurance has retained a net premium of Rs. 61.96 crores which was Rs. 65.68 crores in the corresponding quarter of the previous year.
Net Claim and Total Outstanding Claim
The Net claim of Siddhartha Insurance has surged by 21.20 percent until the third quarter. In the nine months of this fiscal year, the net claim paid stands at Rs. 38.53 crores. In the third quarter of 2074/75, the insurance had net claim settlement of Rs. 31.79. Similarly, the total outstanding claim of the Insurance stands at Rs. 60.85 crores at the end of the third quarter this year. This is a growth of 3.98 percent in the total outstanding claim.
Paid-up Capital, Reserve and Insurance Fund
Siddhartha Insurance has a paid-up capital of Rs. 86.59 crores until the third quarter of 2075/76. The capital has grown by 35 percent from the previous year. Last year, the capital stood at Rs. 64.14 crores in the third quarter. The paid-up capital is likely to rise above Rs. 1 Arba after the adjustment of this year bonus share.
Similarly, the reserve and surplus have grown by 127.67 percent to RS. 27.48 crores in the third quarter. This reserve is likely to decline after the dividend adjustment of last year.
Likewise, the insurance fund has surged by 29 percent to Rs. 64.80 crores in the third quarter. The company had Rs. 50.29 crores in insurance fund until the third quarter of the previous year.
Investment
The total investment amount of Siddhartha Insurance has grown to Rs. 221.32 crores. This is a growth of 26.63 percent from the corresponding quarter of the previous year. The total investment stood at Rs. 174.78 crores until the third quarter of the previous year.
Net Profit, Earnings Per Share (EPS) and Net-worth Per Share
The net profit of Siddhartha Insurance has remained stagnant until the third quarter. The profit stood at Rs. 18.10 crores, which is only 0.33 percent rise from the corresponding quarter of the last year. In the previous year, the company had made a profit of Rs. 18.04 crores until the third quarter.
Similarly, the Earnings Per Share (EPS) of Siddhartha Insurance has declined drastically. The EPS fell by 25.68 percent. This is mainly due to slow growth in profit relative to the high growth of 35 percent in the capital. EPS stands at Rs. 27.87. In the third quarter of the previous year, the company’s EPS stood at Rs. 37.50.
Likewise, the Net-worth per share has increased by 4 percent only. The company has net-worth per share of Rs. 215.46 in the third quarter of this fiscal year. The net-worth per share stood at Rs. 207.16.
The comparative performance of Siddhartha Insurance in the third quarter of fiscal year 2075/76 is shown in the table below:
| Headings | 3rd Qtr, 2075/76 | 3rd Qtr, 2074/75 | Percent Change |
| Paid-up capital (Rs. ‘crores’) | 86.59 | 64.14 | 35.00 |
| Reserve & Surplus (Rs. ‘crores’) | 27.48 | 12.07 | 127.67 |
| Insurance Fund (Rs. ‘crores’) | 64.80 | 50.29 | 28.85 |
| Total Premium (Rs. ‘crores’) | 134.34 | 129.59 | 3.67 |
| Net Premium (Rs. ‘crores’) | 61.96 | 65.68 | -5.66 |
| Net Claim (Rs. ‘crores’) | 38.53 | 31.79 | 21.20 |
| Total Outstanding Claim(Rs. ‘crores’) | 60.85 | 58.52 | 3.98 |
| Total Investments (Rs. ‘Arba’) | 221.32 | 174.78 | 26.63 |
| Net Profit (Rs. ‘Crores’) | 18.1 | 18.04 | 0.33 |
| Earnings Per Share (Rs.) | 27.87 | 37.5 | -25.68 |
| Net-worth Per Share (Rs.) | 215.46 | 207.16 | 4.01 |
Conclusion
Siddhartha Insurance has shown impressive expansion in the past five years period. The company excelled in the premium collection and profit growth during this period. However, the growth rate seems stalled in the current year. Despite increment in branches, the premium collection has not increased in the current year. This is a matter of concern for the management team. To maintain the exciting growth rate of the past in the future poses a major challenge for insurance. With the rise in the capital, the returns to the shareholders are likely to decline in the coming years. Putting aside the current state, Siddhartha Insurance is one of the strong contenders to lead the non-life insurance business of Nepal in the future.
NOTE: The data of F.Y 2074/75 and F.Y. 2073/74 are taken as per the GAAP for ease in comparison. In the NFRS system, it may vary.
(Investments are subject to market risks and investors are advised to do personal homework before making any investment decision. This material is just a guideline for the investors to do further investigations)
