The first seven months of the current fiscal year have been noteworthy for the Nepali insurance sector. While the drive for the merger in the banking sector seems to be gradually settling down with the conclusion of some big mergers and acquisitions (M&As), the consolidation in the insurance sector is in full swing.
Life insurance companies recorded significant growth in their profits in the first half of the current fiscal year. The unaudited financial reports of the life insurance companies for the second quarter of the current fiscal year, the profits of the insurers increased by 72.51 percent in the first six months of FY 2022/23.
The 18 life insurance companies posted profits totaling Rs3.37bn during the review period, an increase of Rs1.41bn from the same period of the last fiscal year. The companies earned a net profit of Rs 1.95bn in the first half of FY 2021/22.
Nepal Life Insurance Company has topped the chart in terms of net profit earnings. The company posted a net profit of Rs440m in the first half of the current fiscal. Sun Nepal Life Insurance came second with a net profit of Rs353m followed by Surya Jyoti Life Insurance with Rs284.1bn.
According to insurers, high deposit interest rates of banks and financial institutions have driven their profits as insurance companies keep most of their investable capital in fixed deposits of commercial banks. The fixed deposit interest rate for institutional investors climbed as high as 12 percent when the financial system was hit by a severe shortage of investible funds.
Compared to life insurance companies, the profit of non-life insurance companies grew by 20 percent in the first half of the current fiscal.
Marginal growth in premium collection
While the profits have grown, the overall business of life insurance companies grew marginally in the first seven months of this fiscal year. According to Nepal Insurance Authority (NIA), life insurance companies collected premiums amounting to Rs83.32bn in the first seven months of the current fiscal year. The premium collection of life insurance companies during the same period of the last fiscal stood at Rs81.30bn.
The business of non-life insurance companies grew by almost six percent in the first seven months of the current fiscal year.
The 18 non-life insurance companies that are in operation in Nepal, have collected Rs23.06bn as insurance premiums till mid-February, 2023. Non-life insurance companies' insurance premium has increased by Rs1.25bn in the first seven months of FY 2022/23. Such insurance premium stood at Rs21.81bn during the same period of the last fiscal year.
Insurance sector experts have termed the growth rate of the non-life insurance business as not encouraging. The growth rate of the non-life insurance business was high in the last few years. "The non-life insurance business has been affected this year due to the economic downturn and high inflation rate," said Raju Raman Paudel, Executive Director of NIA.
Merger drive
In the last one year, a series of merger agreements have been signed among both, life insurance and non-life insurance companies.
The merger momentum in the Nepali insurance sector intensified after NIA increased the minimum paid-up capital requirements for insurers of both categories. The authority has increased the paid-up capital of non-life insurance companies to Rs2bn while it is Rs5bn for life insurance companies. The authority has been pushing for consolidation in the Nepali insurance sector since the new Chairman Surya Silwal took charge of NIA.
Of the 19 insurance companies involved in the merger process, six companies have merged to become three and have started their integrated business while 13 others are still in the process of completing their merger process.
According to NIA, 10 non-life insurance companies have signed merger MoUs to become five, while nine life insurance companies have also signed merger deals to become four entities.
So far, two life insurance companies and six non-life insurance companies have completed the merger process and have started integrated business.
Life Insurance Companies’ Profit (First Six Months)
| FY |
Profit (in Rs, in bn) |
Change (in percent) |
| 2022/23 |
3.37 |
+72.51 |
| 2021/22 |
1.95 |
|
Non-Life Insurance Companies’ Profit (First Six Months)
| FY |
Profit (in Rs, in bn) |
Change (in percent) |
| 2022/23 |
2.56 |
+20.18 |
| 2021/22 |
2.13 |
|
Non-Life Insurance Companies’ Profit (First Six Months)
| Company |
Profit (in Rs, in m) |
| Rastriya Beema Company |
374.19 |
| Shikhar Insurance |
240.70 |
| Sagarmatha Insurance |
179.34 |
| Neco Insurance |
176.06 |
| National Insurance |
169.12 |
| Premier Insurance |
156.18 |
| Nepal Insurance |
153.27 |
| Siddhartha Insurance |
147.36 |
| IME General Insurance |
130.91 |
| Oriental Insurance |
128.69 |
| Sanima GIC Insurance |
117.48 |
| Himalayan General Insurance |
112.59 |
| NLG Insurance |
106.65 |
| Lumbini General Insurance |
104.90 |
| Prabhu Insurance |
94.70 |
| United Insurance |
80.29 |
| Ajod Insurance |
48.83 |
| Prudential Insurance |
40.18 |
Life Insurance Companies’ Profit (First Six Months)
| Company |
Profit (in Rs, in m) |
| Nepal Life Insurance |
440.16 |
| Sun Nepal Life Insurance |
353.97 |
| Suryajyoti Life Insurance |
284.19 |
| National Life Insurance |
227.37 |
| Reliable Nepal Life Insurance |
220.04 |
| Asian Life Insurance |
191.27 |
| Prime Life Insurance |
174.74 |
| Reliance Life Insurance |
166.78 |
| Met Life Insurance |
145.39 |
| Prabhu Life Insurance |
128.26 |
| Gurans Life Insurance |
127.55 |
| Citizen Life Insurance |
120.36 |
| IME Life Insurance |
117.67 |
| Sanima Life Insurance |
116.18 |
| Union Life Insurance |
104.61 |
| LIC Nepal Insurance |
98.75 |
| Mahalaxmi Life Insurance |
71.87 |
| Rastriya Beema Sansthan |
10.29 |
Insurance Premium Collection (First Seven Months)
| Sector |
First Seven Month
2021/22 (in Rs, in bn) |
First Seven Month
2022/23 (in Rs, in bn) |
| Life Insurance Companies |
81.30 |
83.32 |
| Non-Life Insurance Companies |
21.81 |
23.06 |
| Total |
103.11 |
106.38 |
Life Insurance Companies’ Premium Collection (First Seven Months)
| Company |
Mid-February
2022/23 (in Rs, in bn) |
| Nepal Life |
21.64 |
| LIC Nepal |
10.22 |
| National Life |
8.98 |
| Rastriya Beema Sansthan |
6.48 |
| Suryajyoti Life |
4.86 |
| Union Life |
4.54 |
| Asian Life |
4.10 |
| Citizen Life |
3.14 |
| Met Life |
2.90 |
| Prime Life |
2.63 |
| IME Life |
2.32 |
| Sun Nepal Life |
2.29 |
| Reliable Nepal Life |
2.08 |
| Reliance Life |
1.78 |
| Gurans Life |
1.77 |
| Sanima Life |
1.48 |
| Prabhu Life |
1.22 |
| Mahalaxmi Life |
0.895 |
Non-Life Insurance Companies’ Premium Collection (First Seven Months)
| Company |
Mid-February
2022/23 (in Rs, in bn) |
| |
upto Magh 2079 |
| Sikhar Insurance |
2.98 |
| Neco Insurance |
1.75 |
| Rastriya Beema Company |
1.69 |
| Himalayan Everest Insurance |
1.69 |
| Sagarmatha Insurance |
1.68 |
| Siddhartha |
1.52 |
| NLG Insurance |
1.40 |
| Sanima GIC Insurance |
1.19 |
| Premier Insurance |
1.17 |
| Lumbini General |
1.12 |
| Ajod Insurance |
1.08 |
| IME General Insurance |
1.05 |
| Prabhu Insurance |
0.925 |
| Nepal Insurance |
0.889 |
| Oriental Insurance |
0.840 |
| Prudential Insurance |
0.764 |
| United Insurance |
0.684 |
| National Insurance |
0.582 |
