Nepal Life profit falls 22.8% as claims, costs outpace premium growth
Premium income grew 12.1% but claims and costs rose faster, leaving ROE at 3.89%.
Nepal Life Insurance reported net profit of Rs 46.55 crore for FY 2082/83, down 22.8% from a year earlier, as claim payments and operating costs outgrew a 12.1% rise in net premium. Why it matters: the decline removes the earnings support behind a stock trading at a wide premium to its listed life-insurance peers.
Full-year financials
Total revenue rose 8.8% to Rs 74.34 arba, with net premium up 12.1% to Rs 53.45 arba, but costs moved faster. Total expenses and provisions climbed 10.2% to Rs 70.77 arba and gross claim payments rose 12.4% to Rs 21.58 arba, while investment, loan and other income grew only 2.1% to Rs 16.66 arba. Net profit of Rs 46.55 crore gives EPS of Rs 4.91, down 26.5% — a fall amplified by a 5% increase in paid-up capital — and ROE of 3.89%, one point lower than last year, with book value down 7.8% to Rs 126.07. The final quarter alone contributed just Rs 1.06 crore of the year's earnings.
Balance sheet and claims
Total assets expanded 15.8% to Rs 292.1 arba and the investment book grew 4.4% to Rs 250.9 arba, led by short-term investments, which rose 16.6%. The strain is on the income side: investment earnings are growing at a fraction of the asset base, and net claim payments of Rs 62.84 arba, up 9.6%, absorb most of the premium growth. Policies in force rose to 1,177,803 from 774,351, so the top-line expansion is volume-led. Total equity contracted 3.2% to Rs 11.95 arba, with reserves and surplus down 25.2% to Rs 92.81 crore.
Peer comparison
Among listed life insurers the decline is mid-pack: Reliable Nepal Life and Life Insurance Co. Nepal grew earnings 2.2% and 28.5% respectively, while National Life fell 10.2% and Himalayan Life 41.9%. The sharper contrast is in profitability and rating: NLIC's ROE of 3.89% trails Reliable's 7.55%, Asian Life's 6.57% and Prabhu Mahalaxmi's 6.07%, yet its P/E of 148.1 stands above every listed peer, the next-highest multiple being Life Insurance Co. Nepal's 106. That leaves the valuation increasingly dependent on a margin recovery.
Market context
The stock closed at Rs 740 on 27 October, down 0.5% on the day but 1.05% higher over five sessions and 0.68% higher over a month, inside a 52-week range of Rs 680.5–856. Turnover of 9,184 shares was thin; trading has been listless, with buyers unwilling to pay up ahead of the report.
Outlook
The next test is the first-quarter report for FY 2083/84, which will show whether claims and expense growth are normalising relative to premium income. What would change the picture is a quarter where investment income accelerates or claims costs grow more slowly than premiums — either would begin to repair ROE off the current 3.89%.
For information only. Not investment advice.