Insurance companies post hefty rise in profit KATHMANDU, Sept 6: Here is good news for insurance policyholders. They are likely to get handsome amount as bonus as insurance companies operating in the country have reported hefty rise in profits. According to Insurance Board - the insurance sector regulator, insurance companies have reported profit of as high as 305 percent. So far, 18 of the 26 insurance companies have submitted their unaudited financial statements to the IB. “Policyholders will get impressive return this year as 90 percent of the profit goes to policyholders as bonus payment,” Santosh Prasai, senior chartered accountant of IB, told Republica. He attributed impressive rise in profits to the board´s regulation that put a cap on management expenditure of insurance companies. The IB enforced a regulation on the first day of 2012/13 that required life insurance companies to limit their expenditure on business promotion, advertisement, reception and commission paid to insurance agents to six percent of total premium collection. Such a limit for non-life insurance companies was fixed at 1.5 percent. “The regulation has lowered management cost of insurance companies by about Rs 780 million,” Prasaid said, adding: “The transactions of insurance companies, however, came down by Rs 180 million this year.” According to Prasai, bonus return for policyholders will be the highest in South Asia this year. Financial statements submitted to the IB showed some insurance companies have made profit equivalent to 80 or 90 percent of their paid-up capital. The government has set paid-up capital of Rs 250 million for life insurance companies and Rs 100 million for non-life insurance companies. However, life and non-insurance companies will have to raise their paid-up capital to Rs 500 million and Rs 250 million by mid-September. Thanks to impressive profit-making by insurance companies, investors are making a beeline to buy insurance stocks at the Nepal Stock Exchange (Nepse). Anjan Raj Poudyal, former president of Stock Brokers´ Association of Nepal, said investors buying insurance stocks in big numbers eyeing divided and bonus shares. “Insurance companies will have to issue bonus shares to meet the new paid-up capital requirement,” Poudyal added. The Insurance sub-index has increased by nearly 360 points over the past two months. The sub-index closed trading at 1,237.34 points this week, up from 877.36 points in the first week of July. Twenty-two insurance companies are listed in the secondary market. Published on 2013-09-07 05:58:32
Posted on: Sat, 07 Sep 2013 12:38:59 +0000
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