The sky is the limit for this leading Nepali life insurance company.
--BY BIJAYA LAXMI DUWAL
At a time when insurance companies in Nepal are struggling to meet the new capital requirements set by the Insurance Board, Nepal Life Insurance Company (NepalLife) Limited has raised its paid-up capital to more than double the amount than required within the deadline. NepalLife’s paid-up capital now stands at Rs 5.49 billion, Rs 3.59 more than the required paid-up capital of Rs 2 billion set for life insurance companies, making it the first life insurer to meet the target.
It is indeed another milestone for NepalLife, which in the last 18 years of its operation has continously added feathers on its cap. “NepalLife has succeeded in establishing itself as the most promising insurer in the Nepali life insurance fraternity.
Due to this, we have garnered satisfied staff, shareholders and customers which have added to our energy to improve in overall business parameters to achieve milestones one after another,” says the company’s CEO Vivek Jha. According to him, meeting the new capital requirement was a smooth affair for NepalLife because the company already had Rs 3 billion in paid-up capital when the regulator directed life insurance companies to raise their capital to Rs 2 billion.
Established in April 5, 2001, NepalLife has upped its market presence with robust growth in its new premium collection i.e. first premium by 64 percent compared to the last fiscal year.
Of its total premium collection amounting to Rs 23 billion, the company’s first premium collection totaled more than Rs 9 billion in FY2019/20. Currently, the company commands over 30 percent share of the domestic life insurance market.
The company has been maintaining this share of the market for the last five years, according to Jha who has been heading the company as CEO for the last eight years.
NepalLife is the first life insurance company in Nepal promoted by domestic private sector investors. Its promoters include renowned people from the country’s industrial and commercial fraternities, which add to the company’s credibility. Currently, Govinda Lal Sanghai, Executive Director of Triveni Group, serves as the company’s chairman.
The strengths of NepalLife are visible in most of the key areas of its business, such as the company’s customer base, branches network, agent base, number of policies issued, insurance products and financial aspects such as presence in the stock market, paid-up capital, premium collection, life fund, distribution of dividend and bonus shares to its shareholders. This is primarily due to the quality of NepalLife’s services- the company now has a record 128,461 trained insurance agents. So far, the company has issued 2.63 million insurance policies while receiving Rs 91.70 billion in total premium collections.
Likewise, NepalLife has distributed insurance claims of maturity on the issued policies and deaths of the policyholders amounting to Rs 24.64 billion worth since its inception.
NepalLife is among the few life insurers in Nepal with a large network coverage. Currently, it has 180 branch offices across the country. The company has a total of 550 well trained and dedicated workers.
Over the past decade, NepalLife has witnessed many positive changes in its business in an impactful way as insurance services have become a matter of priority for investors, insurers and the government. Compared to a decade ago, the company’s business has grown by leaps and bounds. For instance, 10 years ago, NepalLife had only around a 20 percent share of the life insurance market with its first premium collection totaling around Rs 520 million, which has now reached Rs 9 billion. According to Jha, the company’s total premium collection for a year was only around Rs 1.4 billion a decade ago which has now reached Rs 23 billion. Meanwhile, the company maintains a shareholders fund of around Rs 10 billion and life fund of Rs 67 billion as of the end of the last fiscal year.
So far, NepalLife has invested a total of Rs 72 billion, the majority of which has been deposited in the fixed deposit accounts of banks. But NepalLife has invested in other areas too. Nepal Infrastructure Bank Limited (NIFRA), Citizens Investment Trust (CIT), NIC Asia Bank Limited, Nepal Re-insurance Company Limited and Nepal Doorsanchar Company Limited (Nepal Telecom) are some of the major institutions where the company has invested. The company has invested around five percent of its total investment in shares of different companies listed in the stock market. The company invested Rs 396.9 million in 2009/2010 and opened Nepal Life City Center, Nepal’s first family shopping and entertainment centre in Kamalpokhari.
According to Jha, NepalLife has been investing in ways that minimise risks and yield better returns. “Basically, our investments have to be risk-free propositions as we cannot risk public money. We have utilised our capital in an effective manner,” he said. With the government decision a few months ago to allow insurance companies to invest in areas such as real estate and stocks, NepalLife is also looking to diversify its investments.
“Talking about utilisation of our capital after the Insurance Board last year revised the investment guidelines and opened up new areas for insurance companies, we plan to invest in long-term asset building and to generate resources that will help to compliment our business portfolio,” shares Jha. NepalLife has wanted to invest in government securities, but the limited availability of such tools has obstructed the company to make such investments. “If we look internationally, the major portion of portfolio investment of life insurance companies is in government securities because such tools are basically considered risk-free. Due to lack of such tools, fixed deposits of commercial banks are the best investment option for us at the moment,” mentions Jha. From its total investment, NepalLife earned around 10 percent yield last year.
The company’s latest investment is in NIFRA which was established in early March this year to promote funding in large infrastructure projects. NepalLife has invested Rs 1.8 billion in the bank which makes it the second largest institutional promoter in NIFRA after the government.
According to Jha, NepalLife has always ranked among the top six in the stock market in terms of the value of shares. Similarly, it is among the top insurance companies in the country to distribute dividends to its investors at higher rates. From 2012 to 2018, NepalLife has distributed 468.25 percent in dividends to its shareholders. The company also stayed in the forefront in distributing bonuses to its policyholders.
Products and Services
With a total of 20 products in categories including endowment, limited payment money-back (anticipated) endowment plan, education plan, children’s plan, endowment cum whole life policy, term plan, joint life plan and micro insurance plan, NepalLife has been offering Nepalis the option to choose from a wide range of life insurance products to secure their lives as well as the lives of their dear ones. Surakshit Jeevan Beema, Naulo Jeevan Sambriddhi, Naulo Dhana Barsa, Jeevan Unnati, Child Education Plan, Jeevan Sahara, Smart Life Insurance, Jeevan Laxmi, NepalLife Jeevan Jyoti, Gramin Sawadhik, Ketaketi Jeevan Beema, NepalLife Term Life Plan, Critical Illness Rider, Jeevan Sarathi, Sadabahar Jiwan Beema and NepalLife Micro Term are the products the company has been selling at present.
The normal endowment plan Surakshit Jeevan Beema was the top selling and most popular life insurance product of NepalLife in the last year. According to Jha, this product sold Rs 4 billion, or 45 percent, of the company’s total new premium collection of Rs 9 billion in the last fiscal year.
“Among the 20 products, the majority selling products are endowment plans. Presently, we have 5-7 very good selling endowment plans,” he says.
But the largest selling products can change on a yearly basis. “Last year, we introduced a new plan called Sadabahar Jiwan Beema and its sales have just picked up. It is possible that it can come up as the most popular life insurance product in the market,” thinks Jha. In the meantime, NepalLife is preparing to launch four new plans, two in endowment and two in other categories.
NepalLife gives high priority to CSR initiatives and actively engages in religious programmes. The company also participates in rescuing people during natural disasters. Furthermore, it is planning to carry out social programmes by establishing a foundation.