Life Insurance Corporation Nepal (LICN) Q4 2024/25 Financial Review: Examining Profitability, Premium Growth, and Market Performance

Total Revenue

Life Insurance Corporation Nepal reported a 7.01% increase in total revenue, reaching Rs. 32,331,239.01 thousandin Q4 2024/25, up from Rs. 30,023,314.70 thousand in Q4 2023/24. This growth is slightly higher than the 6.27%increase in Q3, indicating steady growth despite the industry challenges. The revenue decline compared to the previous quarter (Q4) suggests some seasonal or cyclical factors impacting performance. However, overall, the company has managed to sustain a positive revenue trend over the year.

Gross Profit

The gross profit increased to Rs. 3,866,547.29 thousand in Q4 2024/25, showing a modest growth from Rs. 3,575,374.66 thousand in Q4 2023/24. The gross margin stands at 11.96% in Q4, showing stability despite fluctuations in total revenue. The decrease from the previous quarter’s 12.06% gross margin suggests slightly increased costs, but the company continues to maintain a strong profitability position.

Net Income

LICN’s net income increased to Rs. 315,893.98 thousand in Q4 2024/25, up from Rs. 238,506.34 thousand in Q4 2023/24. This is a notable improvement, with a net margin of 0.98% in Q4, reflecting a strong operational performance. The net margin improvement from 0.79% last year suggests effective management of costs and higher profitability despite the slight revenue decline.

Return on Assets (ROA) and Return on Equity (ROE)

The Return on Assets (ROA) stands at 0.23% for Q4 2024/25, a marginal increase from 0.20% in Q4 2023/24, indicating slight improvements in the efficiency of asset utilization. The Return on Equity (ROE) stands at 3.94%, down from 4.39% in Q4 of the previous year, showing a slight reduction in shareholder returns, which may be a result of the higher costs in the current year despite the revenue growth.

Earnings Per Share (EPS) and Price-to-Earnings (P/E) Ratio

The Earnings Per Share (EPS) decreased slightly to 5.74 in Q4 2024/25, from 8.99 in Q4 2023/24, reflecting the slight drop in net income. However, the Price-to-Earnings (P/E) ratio stands at 154.82, which indicates that the stock is highly valued relative to its earnings. The high P/E ratio suggests market optimism regarding LICN's future growth prospects, although its earnings growth in the short term remains moderate.

Book Value and Market Value per Share

The book value per share increased to Rs. 187.47 in Q4 2024/25, compared to Rs. 234.83 last year, indicating a reduction in the company's net worth per share. However, the market value per share saw a significant increase to Rs. 889.23 from Rs. 1,438.00 in Q4 2023/24, reflecting investor optimism despite short-term revenue and profit fluctuations.

Non-Life Insurance Performance

In the non-life insurance sector, the total number of enforced policies saw a 0.27% increase to 691,871, showing stability in policyholder retention. First Year Premium increased by 29.56%, indicating strong customer acquisition efforts. The single premium also saw significant growth, up 123.12%, which highlights a surge in demand for one-time premium products.

Claims and Outstanding Benefits

The company’s total benefits and claims paid increased by 4.62%, reaching 32,254 claims in Q4. Meanwhile, the outstanding benefits and claims showed a significant rise of 66.34%, reaching 9,754 claims, indicating an increase in future liabilities and claims yet to be settled.

Investments

LICN continues to manage a solid investment portfolio, with long-term investments at Rs. 93,320,722.79 thousand in Q4, reflecting a stable asset base. The company also managed short-term investments worth Rs. 24,019,668.27 thousand, indicating robust liquidity and the ability to handle short-term obligations.