While non-life insurance companies saw their business grow by single digits in the nine months of the current fiscal year, the profits of the insurers have increased by double digits. The financial reports for the third quarter of non-life insurance companies show their profits have increased by 26.68 percent.
Of the 17 non-life insurance companies operating in Nepal, all have published their third-quarter reports except for National Insurance. In the review period, the 16 non-life insurance companies earned a net profit totaling Rs 4.43bn, up Rs 933.9m from Rs 3.5bn in the same period of FY 2021/22.
As the country grapples with the economic slowdown, the insurance business has taken a beating in the current fiscal year. Both life and non-life insurance business grew in single digits in the first nine months of the current fiscal year.
According to the Nepal Insurance Authority (NIA), the premium collection of non-life insurance companies stood at Rs 30bn in the nine months of the current fiscal year compared to Rs 28.70 billion during the same period of the last fiscal year. The premium collection of non-life insurance companies has grown by only 4.58 percent.
Insurers say their profits improved mainly due to the high-interest rates on deposits of banks and financial institutions. Insurance companies keep most of their investable capital in fixed deposits of commercial banks.
Over the past year, institutional depositors such as insurance companies have benefitted from high deposit rates as banks struggled with a prolonged liquidity crunch.
According to insurers, their profits may increase further after the actuarial valuation. However, such an assessment will be done after the completion of the fiscal year, during which up to 10 percent of the insurance fund can be transferred to the profit and loss account.
According to Sunil Ballabh Pant, CEO of NLG Insurance, the expenses of companies have also declined following the mergers.
Among the non-life insurance companies, the government-owned Rastriya Beema Company recorded the highest profit of Rs 686.43m. Siddharth Insurance (now Siddhartha Premier Insurance) posted the second highest net profit at Rs 392.65m followed by Oriental Insurance at Rs 392.24m.