Top 5 Life Insurance In Nepal: Comparative Study [Updated]

August 24, 2021 | Investopaper

Life insurance business is rapidly expanding in Nepal. More than 27 percent of the population is already covered by the life insurance. At current, there are 19 life insurance companies in Nepal. However, the major market share of the life insurance business is captured by the few life insurance companies. Nepal Life Insurance almost covers 27.15 percent share of the total life insurance business in Nepal. Likewise, LIC Nepal has approximately 14.17 percent market share in Nepal.


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In terms of business volume generated over the years, we have classified the top five life insurance companies of Nepal. They are:

1. Nepal Life Insurance (NLIC)

2. Life Insurance Corporation (LIC) Nepal

3. National Life Insurance (NLICL)

4. Rastriya Beema Sansthan (RBS)

5. Asian Life Insurance (ALICL)


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Here, we will try to compare the performance of these companies and figure out which company excels over the others. The financial comparison of the top five life insurance companies will be based on the following indicators:

Paid-Up Capital

Nepal Life Insurance is the largest life insurance company of Nepal in terms of paid-up capital. Nepal Life Insurance has a capital of Rs. 7.19 Arba. Likewise, National life insurance has a capital of Rs 3.39 Arba. Among these five insurance companies, the state owned Rastriya Beema Company has the lowest capital of Rs 18.10 crores.

The paid-up capital of the five life insurance companies is shown in the table below:

Paid-up Capital  (Rs. ‘Arba’)

Life Insurance Companies Ashad End, 2078 BS Ashad End, 2077 BS Ashad End, 2076 BS
Nepal Life Insurance 7.19 5.5 5.5
National Life Insurance 3.39 3.08 3.01
LIC Nepal 2.21 2.01 1.49
Asian Life Insurance 2.01 2.01 2.01
Rastriya Beema Sansthan 0.18 0.18 0.18

Source: Based on the Unaudited Fourth Quarter Report, FY 2077/78 & FY 2076/77


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Reserve & Surplus

At the end of Ashad 2078 BS, Nepal Life Insurance has the highest reserve and surplus among the life insurance companies with Rs. 1.01 Arba. Asian Life Insurance has a total reserve and surplus of Rs 89 crores.

The state-owned Rastriya Beema Sansthan has the lowest reserve of Rs. 34 crores.

The reserve and surplus is present in the table below:

Reserve & Surplus (Rs. ‘Arba’)

Life Insurance Companies Ashad End, 2078 BS Ashad End, 2077 BS Ashad End, 2076 BS
Nepal Life Insurance 1.01 3.51 2.44
Asian Life Insurance 0.89 0.55 0.37
National Life Insurance 0.88 1.04 0.92
LIC Nepal 0.64 0.52 0.94
Rastriya Beema Sansthan 0.34 0.29 0.23

Source: Based on the Unaudited Fourth Quarter Report, FY 2077/78 & FY 2076/77


Life Assurance Fund

Nepal Life Insurance also leads in the Life Assurance Fund. NLIC has a massive Life Assurance Fund of Rs. 112.51 Arba. LIC Nepal is second to NLIC with Rs.81.06 Arba in the life assurance fund.

Asian Life Insurance, on the other hand, has the smallest life assurance fund of Rs 26.48 Arba among the five life insurance companies.

The table below shows the Life Assurance Fund of the five life insurance companies of Nepal:

Life Assurance Fund  (Rs. ‘Arba’)

Life Insurance Companies Ashad End, 2078 BS Ashad End, 2077 BS Ashad End, 2076 BS
Nepal Life Insurance 112.51 87.03 65.37
LIC Nepal 81.06 67.7 54.01
National Life Insurance 42.42 33.72 27.19
Rastriya Beema Sansthan 32.96 26.54 20.65
Asian Life Insurance 26.48 21.61 17.01

Source: Based on the Unaudited Fourth Quarter Report, FY 2077/78 & FY 2076/77


Net Premium

Nepal Life Insurance also excels in the premium collection. The net premium of NLIC is almost double to its closest competitor LIC Nepal. NLIC has collected Rs 31.96 Arba in net premium in the fiscal year 2077/78. Likewise, LIC Nepal has Rs 17.04 Arba in net premium. Asian Life Insurance has the lowest net premium of Rs 5.80 Arba among the five insurance companies.

The table below shows the net premium collection of the five life insurance companies.

Net Premium (Rs. ‘Arba’)

Life Insurance Companies FY 2077/78 FY 2076/77 FY 2075/76
Nepal Life Insurance 31.96 27.34 22.83
LIC Nepal 17.04 14.84 13.35
National Life Insurance 12.11 9.11 7.8
Rastriya Beema Sansthan 7.58 7.06 6.35
Asian Life Insurance 5.8 4.54 4.22

Source: Based on the Unaudited Fourth Quarter Report, FY 2077/78 & FY 2076/77


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Net Claim

In the fiscal year 2077/78, Nepal Life Insurance has paid the net claim of Rs 8.78 Arba followed by LIC Nepal with Rs 7.35 Arba. Asian Life Insurance, on the other hand, has the lowest net claim payment of Rs 99 crores.

The net claim payment by the insurance companies is presented in the table below:

Life Insurance Companies FY 2077/78 FY 2076/77 FY 2075/76
Nepal Life Insurance 8.78 5.97 7.99
LIC Nepal 7.35 3.74 3.35
National Life Insurance 3.95 2.76 2.5
Rastriya Beema Sansthan 3.19 2.81 2.71
Asian Life Insurance 0.99 0.52 0.4

Source: Based on the Unaudited Fourth Quarter Report, FY 2077/78 & FY 2076/77


Total Investments & Loans

Nepal Life Insurance has the huge investment as well as loans against policy of Rs 117.19 Arba until the Ashad end, 2078 BS. LIC Nepal has a total investment and loans of Rs. 81.12 Arba. Among the five insurance companies, Asian Life Insurance has the lowest investments (along with loans) of Rs 27.68 Arba.

The table below shows the total investment and loans of the insurance companies.

Life Insurance Companies Ashad End, 2078 BS Ashad End, 2077 BS Ashad End, 2076 BS
Nepal Life Insurance 117.19 93.65 71.57
LIC Nepal 81.12 68.64 55.56
National Life Insurance 45.84 37.25 30.69
Rastriya Beema Sansthan 30.99 25.13 20.05
Asian Life Insurance 27.68 22.78 18.23

Source: Based on the Unaudited Fourth Quarter Report, FY 2077/78 & FY 2076/77

Note: The total investments and loans include short term and long term investment as well as loans against the policy.


Management Expenses

The management expenses of Nepal Life Insurance is substantially higher than the other life insurers. In the fiscal year 2077/78, the management expenses of NLIC stood at Rs. 2.43 Arba. LIkewise, LIC Nepal and National Life Insurance have management expenses of Rs. 0.9 Arba and Rs 81 crores respectively. .

Rastriya Beema Sansthan has the lowest management expenses of Rs. 18 crores in the fiscal year 2077/78.

The management expenses of the five life insurance companies is shown in the table below:

Management Expenses  (Rs. ‘Arba’)

Life Insurance Companies FY 2077/78 FY 2076/77 FY 2075/76
Nepal Life Insurance 2.43 2.49 2.25
National Life Insurance 1.13 0.81 0.75
LIC Nepal 0.9 1 0.98
Asian Life Insurance 0.82 0.63 0.57
Rastriya Beema Sansthan 0.18 0.21 0.2

Source: Based on the Unaudited Fourth Quarter Report, FY 2077/78 & FY 2076/77


Net Profit

Nepal Life Insurance has earned a highest net profit of Rs. 53.59 crores followed by National Life Insurance with Rs. 40.12 crores. State-owned Rastriya Beema Sansthan has the lowest net profit of Rs. 5.62 crores in the fiscal year 2077/78.

Note: The net profit doesn’t include the profit from the actuarial valuation which will be calculated during the final audit. Hence, the net profit of life insurance companies will differ after the audit. 

The table below shows the Net Profit of the five life insurance companies of Nepal:

Net Profit  (Rs. ‘crores’)

Life Insurance Companies FY 2077/78 FY 2076/77 FY 2075/76
Nepal Life Insurance 53.59 53.04 52.33
National Life Insurance 40.12 39.12 33.63
Asian Life Insurance 25.43 18.19 10.19
LIC Nepal 19.09 11.98 16.15
Rastriya Beema Sansthan 5.62 5.91 5.7

Source: Based on the Unaudited Fourth Quarter Report, FY 2077/78 & FY 2076/77


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Number Of Policies

Until the Ashad end 2078 BS, Nepal Life Insurance has sold the highest number of policies i.e 1,381,433. National Life Insurance is second to NLIC and has issue 945,197 insurance policies. Asian Life Insurance has sold the lowest insurance policies (325,061).

Note: The number of policies issued by Rastriya Beema Sanstha is not mentioned in its respective quarterly report. 

The table below presents the total number of policies issued by the insurance companies.

Life Insurance Companies Ashad End, 2078 BS Ashad End, 2077 BS Ashad End, 2076 BS
Nepal Life Insurance          1,381,433 1,304,632 1,280,636
National Life Insurance              945,197 810,832 721,008
LIC Nepal              741,239 762,163 794,451
Asian Life Insurance              325,061 290,723 250,354
Rastriya Beema Sansthan

Source: Based on the Unaudited Fourth Quarter Report, FY 2077/78 & FY 2076/77

Earnings Per Share (EPS) And Networth Per Share

Based on the unaudited report, Rastriya Beema Sansthan has the highest Earnings Per Share (EPS) and net-worth per share of Rs 31.04 and Rs 288.89 respectively. Nepal Life Insurance has the lowest EPS  and per share net-worth of Rs. 7.44 and Rs 130.25 respectively.

The Earnings Per Share (EPS) and Net-Worth Per Share of the five life insurance companies is presented in the table below:

Life Insurance Companies Earnings Per Share (Rs.) Networth Per Share (Rs.)
Rastriya Beema Sansthan 31.04 288.89
Asian Life Insurance 12.65 149.24
National Life Insurance 11.83 134.33
LIC Nepal 8.64 141.43
Nepal Life Insurance 7.44 122.3

Source: Based on the Unaudited Fourth Quarter Report, FY 2077/78 & FY 2076/77

Note: Since the profit of the life insurance companies will differ after the actuary valuation, the EPS will differ after the audit.


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Market Price Per Share And P/E Ratio

At the end of Ashad 2078 BS, LIC Nepal has highest share price of Rs. 2342 with P/E ratio of 271.06. National Life Insurance’s shares are traded at relatively lower price of Rs 1151 with P/E ratio of 97.30.

The table below presents the share price and P/E ratio of the five life insurance companies:

Life Insurance Companies Market Price Per Share (Rs.)  P/E Ratio
LIC Nepal 2342 271.06
Nepal Life Insurance 1919 257.93
Asian Life Insurance 1348 106.56
National Life Insurance 1151 97.30
Rastriya Beema Sansthan

Source: Based on the Unaudited Fourth Quarter Report, FY 2077/78 & FY 2076/77

Note: The share price is of Ashad end, 2078 BS. The share price of Rastriya Beema Sansthan is not traded in NEPSE. Therefore, the share price as well as P/E ratio is not known. 

At current, the share price along with P/E ratio may vary.


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Top 5 Life Insurance Company in Nepal: Summary

The financial comparison is also summarized in the table below:

Financial Indicators Asian Life Insurance LIC Nepal National Life Insurance Nepal Life Insurance Rastriya Beema Sansthan
Paid-up Capital  (Rs. ‘Arba’) 2.01 2.21 3.39 7.19 0.18
Reserve & Surplus (Rs. ‘Arba’) 0.89 0.64 0.88 1.01 0.34
Life Assurance Fund  (Rs. ‘Arba’) 26.48 81.06 42.42 112.51 32.96
Net Premium (Rs. ‘Arba’) 5.8 17.04 12.11 31.96 7.58
Net Claim (Rs. ‘Arba’) 0.99 7.35 3.95 8.78 3.19
Total Investments  & Loans (Rs. ‘Arba’) 27.68 81.12 45.84 117.19 30.99
Management Expenses  (Rs. ‘Arba’) 0.82 0.9 1.13 2.43 0.18
Net Profit  (Rs. ‘crores’) 25.43 19.09 40.12 53.59 5.62
Number Of Policies 325061 741239 945197 1381433
Earnings Per Share (Rs.) 12.65 8.64 11.83 7.44 31.04
Networth Per Share (Rs.) 149.24 141.43 134.33 122.3 288.89
Market Price Per Share (Rs.) [Ashad end, 2078 BS] 1348 2342 1151 1919
P/E Ratio 106.56 271.06 97.30 257.93

Note :
The above figures are based on the un-audited quarterly report published by the respective insurance companies. Investors are advised to take other things into consideration along with this report while making the investment decisions. The numbers may vary after the final audit.


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Current Status Of Insurance Business In Nepal

 

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One thought on “Top 5 Life Insurance In Nepal: Comparative Study [Updated]

  • August 7, 2021 at 4:03 pm
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    You have missed most important data , claim amount vs paid amount

    Reply

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