Top 5 Life Insurance In Nepal: Comparative Study

August 31, 2020 | Investopaper

Life insurance business is rapidly expanding in Nepal. More than 23 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 32 percent share of the total life insurance business in Nepal. Likewise, LIC Nepal has approximately 18 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. 5.50 Arba. Likewise, National life insurance has a capital of Rs 3.08 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’)
Rank Life Insurance Companies Ashad End, 2077 Ashad End, 2076 Percent Change
1 Nepal Life Insurance (NLIC) 5.5 5.5 0
2 National Life Insurance (NLICL) 3.08 3.01 2.33
3 LIC Nepal (LICN) 2.01 1.49 34.90
4 Asian Life Insurance (ALICL) 2.01 2.01 0
5 Rastriya Beema Sansthan 0.18 0.18 0

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

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Reserve & Surplus

At the end of Ashad 2077, Nepal Life Insurance has the highest reserve and surplus among the life insurance companies with Rs. 3.51 Arba. National Life Insurance has a total reserve and surplus of Rs 1.04 Arba.

The state-owned Rastriya Beema Sansthan has the lowest reserve of Rs. 29 crores.

The reserve and surplus is present in the table below:

Reserve & Surplus (Rs. ‘Arba’)
Rank Life Insurance Companies Ashad End, 2077 Ashad End, 2076 Percent Change
1 Nepal Life Insurance (NLIC) 3.51 2.44 43.85
2 National Life Insurance (NLICL) 1.04 0.92 13.04
3 Asian Life Insurance (ALICL) 0.55 0.37 48.65
4 LIC Nepal (LICN) 0.52 0.94 -44.68
5 Rastriya Beema Sansthan 0.29 0.23 26.09

Source: Based on the Unaudited Fourth Quarter Report, 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. 87.03 Arba. LIC Nepal is second to NLIC with Rs.67.70 Arba in the life assurance fund.

Asian Life Insurance, on the other hand, has the smallest life assurance fund of Rs 21.16 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’)
Rank Life Insurance Companies Ashad End, 2077 Ashad End, 2076 Percent Change
1 Nepal Life Insurance (NLIC) 87.03 65.37 33.13
2 LIC Nepal (LICN) 67.7 54.01 25.35
3 National Life Insurance (NLICL) 33.72 27.19 24.02
4 Rastriya Beema Sansthan 26.54 20.65 28.52
5 Asian Life Insurance (ALICL) 21.61 17.01 27.04

Source: Based on the Unaudited Fourth Quarter Report, 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 27.34 Arba in net premium in the fiscal year 2076/77. Likewise, LIC Nepal has Rs 14.84 Arba in net premium. Asian Life Insurance has the lowest net premium of Rs 4.54 Arba among the five insurance companies.

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

Net Premium (Rs. ‘Arba’)
Rank Life Insurance Companies FY 2076/77 FY 2075/76 Percent Change
1 Nepal Life Insurance (NLIC) 27.34 22.83 19.75
2 LIC Nepal (LICN) 14.84 13.35 11.16
3 National Life Insurance (NLICL) 9.11 7.8 16.79
4 Rastriya Beema Sansthan 7.06 6.35 11.18
5 Asian Life Insurance (ALICL) 4.54 4.22 7.58

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

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Net Claim

In the fiscal year 2076/77, Nepal Life Insurance has paid the net claim of Rs 5.97 Arba followed by LIC Nepal with Rs 3.74 Arba. Asian Life Insurance, on the other hand, has the lowest net claim payment of Rs 52 crores.

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

Net Claim (Rs. ‘Arba’)
Rank Life Insurance Companies FY 2076/77 FY 2075/76 Percent Change
1 Nepal Life Insurance (NLIC) 5.97 7.99 -25.28
2 LIC Nepal (LICN) 3.74 3.35 11.64
3 Rastriya Beema Sansthan 2.81 2.71 3.69
4 National Life Insurance (NLICL) 2.76 2.5 10.40
5 Asian Life Insurance (ALICL) 0.52 0.4 30.00

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

Total Investments & Loans

Nepal Life Insurance has the huge investment as well as loans against policy  of Rs 93.65 Arba until the Ashad end, 2077. LIC Nepal has a total investment and loans of Rs. 68.64 Arba. Among the five insurance companies, Asian Life Insurance has the lowest investments (along with loans) of Rs 22.78 Arba.

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

Total Investments  & Loans (Rs. ‘Arba’)
Rank Life Insurance Companies Ashad End, 2077 Ashad End, 2076 Percent Change
1 Nepal Life Insurance (NLIC) 93.65 71.57 30.85
2 LIC Nepal (LICN) 68.64 55.56 23.54
3 National Life Insurance (NLICL) 37.25 30.69 21.38
4 Rastriya Beema Sansthan 25.13 20.05 25.34
5 Asian Life Insurance (ALICL) 22.78 18.23 24.96

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

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

Income From Investments & Loans

From its investments and loans against policies, Nepal Life Insurance has generated income of Rs 7.98 Arba in the fiscal year 2076/77. Likewise, LIC Nepal has earned Rs 6.08 Arba while Asian Life Insurance has the lowest investment income of Rs 1.87 Arba.

The income from investments and loans earned by the five insurance companies is shown in the table below:

Income From Investment & Loans  (Rs. Arba’)
Rank Life Insurance Companies FY 2076/77 FY 2075/76 Percent Change
1 Nepal Life Insurance (NLIC) 7.98 6.32 26.27
2 LIC Nepal (LICN) 6.08 5.1 19.22
3 National Life Insurance (NLICL) 3.2 2.62 22.14
4 Rastriya Beema Sansthan 2.15 1.76 22.16
5 Asian Life Insurance (ALICL) 1.87 1.48 26.35

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

Management Expenses

The management expenses of Nepal Life Insurance is substantially higher than the other life insurers. In the fiscal year 2076/77, the management expenses of NLIC stood at Rs. 2.49 Arba. LIkewise, LIC Nepal and National Life Insurance have management expenses of Rs. 1 Arba and Rs 81 crores respectively. .

Rastriya Beema Sansthan has the lowest management expenses of Rs. 21 crores in the fiscal year 2076/77.

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

Management Expenses  (Rs. ‘Arba’)
Rank Life Insurance Companies FY 2076/77 FY 2075/76 Percent Change
1 Nepal Life Insurance (NLIC) 2.49 2.25 10.67
2 LIC Nepal (LICN) 1 0.98 2.04
3 National Life Insurance (NLICL) 0.81 0.75 8.00
4 Asian Life Insurance (ALICL) 0.63 0.57 10.53
5 Rastriya Beema Sansthan 0.21 0.2 5.00

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

Net Profit

Nepal Life Insurance has earned a highest net profit of Rs. 53.04 crores followed by National Life Insurance with Rs. 39.12 crores. State-owned Rastriya Beema Sansthan has the lowest net profit of Rs. 5.91 crores in the fiscal year 2076/77.

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’)
Rank Life Insurance Companies FY 2076/77 FY 2075/76 Percent Change
1 Nepal Life Insurance (NLIC) 53.04 52.33 1.36
2 National Life Insurance (NLICL) 39.12 33.63 16.32
3 Asian Life Insurance (ALICL) 18.19 10.19 78.51
4 LIC Nepal (LICN) 11.98 16.15 -25.82
5 Rastriya Beema Sansthan 5.91 5.7 3.68

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

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Number Of Policies

Until the Ashad end 2077, Nepal Life Insurance has sold the highest number of policies i.e 1,304,632. National Life Insurance is second to NLIC and has issue 810,832 insurance policies. Asian Life Insurance has sold the lowest insurance policies (290,723).

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

Number Of Policies
Rank Life Insurance Companies Ashad End, 2077 Ashad End, 2076 Percent Change
1 Nepal Life Insurance (NLIC) 1,304,632 1,280,636 1.87
2 National Life Insurance (NLICL) 810,832 721,008 12.46
3 LIC Nepal (LICN) 762,163 794,451 -4.06
4 Asian Life Insurance (ALICL) 290,723 250,354 16.12
5 Rastriya Beema Sansthan

Source: Based on the Unaudited Fourth Quarter Report, 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 32.63 and Rs 257.91 respectively. LIC Nepal has the lowest EPS of Rs. 5.96 while Asian Life Insurance has the lowest per share net-worth of Rs 130.25.

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

Rank Life Insurance Companies Earnings Per Share (Rs.) Networth Per Share (Rs.)
1 Rastriya Beema Sansthan 32.63 257.91
2 National Life Insurance (NLICL) 16.92 133.61
3 Nepal Life Insurance (NLIC) 9.65 173.92
4 Asian Life Insurance (ALICL) 9.04 130.25
5 LIC Nepal (LICN) 5.96 137.54

Source: Based on the Unaudited Fourth Quarter Report, 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 2077, LIC Nepal has highest share price of Rs. 1,330 with P/E ratio of 223.15. Asian Life Insurance’s shares are traded at relatively lower price of Rs 607 with P/E ratio of 67.11.

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

Rank Life Insurance Companies Market Price Per Share (Rs.)  P/E Ratio
1 LIC Nepal (LICN) 1330 223.15
2 Nepal Life Insurance (NLIC) 1260 130.57
3 National Life Insurance (NLICL) 662 39.13
4 Asian Life Insurance (ALICL) 607 67.11
5 Rastriya Beema Sansthan

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

Note: The share price is of Ashad end, 2077. Rastriya Beema Sansthan is not trade 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:

Headings Nepal Life Insurance (NLIC) LIC Nepal (LICN) National Life Insurance (NLICL) Rastriya Beema Sansthan Asian Life Insurance (ALICL)
Paid-up Capital  (Rs. ‘Arba’) 5.5 2.01 3.08 0.18 2.01
Reserve & Surplus (Rs. ‘Arba’) 3.51 0.52 1.04 0.29 0.55
Life Assurance Fund  (Rs. ‘Arba’) 87.03 67.7 33.72 26.54 21.61
Total Premium (Rs. ‘Arba’) 27.62 14.92 9.22 4.59
Net Premium (Rs. ‘Arba’) 27.34 14.84 9.11 7.06 4.54
Net Claim (Rs. ‘Arba’) 5.97 3.74 2.76 2.81 0.52
Total Investments  & Loans (Rs. ‘Arba’) 93.65 68.64 37.25 25.13 22.78
Income From Investment & Loans  (Rs. Arba’) 7.98 6.08 3.2 2.15 1.87
Management Expenses  (Rs. ‘Arba’) 2.49 1 0.81 0.21 0.63
Net Profit  (Rs. ‘crores’) 53.04 11.98 39.12 5.91 18.19
Number Of Policies 1,304,632 762,163 810,832 290,723
Earnings Per Share (Rs.) 9.65 5.96 16.92 32.63 9.04
Networth Per Share (Rs.) 173.92 137.54 133.61 257.91 130.25
Market Price Per Share (Rs.) [Ashad end, 2077] 1260 1330 662 307
P/E Ratio 130.57 223.15 39.13 33.96

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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