Decline In Profit Of Non-Life Insurance Companies
17th August 2025, Kathmandu
The non-life insurance sector in Nepal has concluded the fiscal year 2024/25 with a sharp downturn in profitability.
Decline In Profit Of Non-Life Insurance Companies
According to the recently published unaudited financial statements, the industry’s collective net profit plummeted by a significant 28 percent compared to the previous year. This decline, which saw total profits fall from NPR 5.852 billion to just NPR 4.163 billion, is a clear signal of the mounting challenges facing the industry, including increased claims, subdued premium growth, and difficult investment conditions.
This broad sectoral dip, however, masks a diverse range of individual performances. While a few companies managed to navigate the tough environment with strategic efficiency and even grow their profits, a larger number of insurers saw their earnings shrink, with one prominent player even slipping into a massive loss. This varied outcome highlights the growing gap between resilient and struggling firms within a highly competitive market.
The Leaders: Companies That Thrived Amidst the Downturn
Despite the gloomy industry-wide data, seven non-life insurance companies demonstrated resilience by posting profit growth. These top performers stand out for their ability to manage costs and claims effectively, and maintain stable business operations.
- Siddhartha Premier Insurance Company emerged as the top profit earner, securing a net profit of NPR 713.1 million. This 3.63 percent increase from the previous year is a testament to its strong position and operational efficiency.
- Himalayan Everest Insurance followed with a profit of NPR 532.3 million, marking a solid 5.95 percent growth year-on-year.
- Shikhar Insurance also held its ground, posting a profit of NPR 452.7 million, a modest 1.66 percent rise.
Other companies that reported positive profit growth include:
- Sanima GIC Insurance: With a profit of NPR 350.3 million, it achieved a growth rate of 10.13 percent.
- Nepal Insurance: The company’s profit of NPR 316.4 million reflected a 4.18 percent increase.
- Prabhu Insurance: This insurer achieved the highest profit growth rate in the industry, surging by a remarkable 39 percent to earn a net profit of NPR 211.9 million. This exceptional performance could be a result of targeted business strategies or effective cost controls that paid off significantly.
- NLG Insurance: The company reported a profit of NPR 161.1 million, an increase of 9.66 percent.
These strong results show that while the industry as a whole is facing a challenging period, success is still possible for companies with sound management practices and a focus on efficiency.
The Strugglers: A Tale of Declining Profits and Heavy Losses
In contrast to the top performers, a majority of non-life insurers found themselves in a difficult position. Six companies saw their profits decline, and one suffered a devastating loss.
Oriental Insurance witnessed the most dramatic decline, with its profit plummeting by a staggering 86 percent compared to the previous year.
Rastriya Beema Company posted a sharp 31.85 percent decrease in its net profit, which fell from NPR 627.3 million to NPR 427.6 million.
IGI Prudential Insurance also faced a steep decline, with its profit dropping by 27 percent to NPR 364.9 million.
Neco Insurance earned NPR 550.8 million, down 6.72 percent.
Sagarmatha Lumbini Insurance and United Ajod Insurance both reported a 12 percent decline in their profits.
The most concerning result came from National Insurance Company, which posted a devastating net loss of NPR 623.9 million. This is a complete reversal from its profit of NPR 266.7 million in the previous fiscal year and signals severe financial stress. Such a significant loss highlights critical issues in the company’s financial health and business model, likely stemming from poor claims management or an inability to control operating costs.
Key Drivers of the Industry-Wide Decline
The sharp 28 percent drop in the sector’s total profit can be attributed to several macroeconomic and operational factors. Rising claim settlements, possibly due to an increase in natural disasters or other unforeseen events, are a major contributing factor. Additionally, a slowdown in economic activity has dampened premium growth, as businesses and individuals become more cautious with their spending on insurance products. Limited investment income, a result of a tight financial environment, has also put pressure on the bottom line.
The performance of non-life insurers in FY 2081/82 serves as a stark reminder of the challenges that lie ahead. The industry is in a state of flux, where the ability to manage risk, handle claims efficiently, and diversify income streams will be paramount for future success. For the Nepali economy, a struggling insurance sector could pose a systemic risk, and therefore, regulators will likely be watching these trends closely. For both policyholders and investors, these results underscore the importance of conducting thorough due diligence before choosing an insurance provider or making an investment. The disparities in performance among companies show that a careful analysis of individual financial reports is crucial to identify financially stable and well-managed insurers that are best positioned to thrive in this competitive market.
