Neco Insurance Q4 Results: Revenue Declines but Profit Margins Stay Strong

Neco Insurance Ltd. (NIL) has published its audited financial results for the fourth quarter of FY 2024/25, reflecting a year-on-year decline in revenue but a solid profitability profile, backed by strong underwriting efficiency and stable investment income.

The company reported a total revenue of Rs. 2.42 billion in Q4, down 21.23% year-on-year compared to Rs. 2.53 billion in Q4 of FY 2023/24. Sequentially, revenue improved from Rs. 1.73 billion in Q3, reflecting recovery momentum despite the yearly contraction.

The gross profit stood at Rs. 1.49 billion, with a gross margin of 61.62%, lower than last year’s 67.48% but stronger than Q2 and Q1 margins (49–47%). This highlights improved cost efficiency compared to earlier quarters, though still pressured by lower premium collections.

Neco Insurance recorded a net income of Rs. 550.83 million in Q4, compared to Rs. 685.71 million in Q4 last year and Rs. 369.33 million in Q3. The net profit margin stood at 22.73%, only slightly lower than last year’s 27.12%, signaling resilient underwriting performance.

Return indicators showed a gradual slowdown. Return on Assets (ROA) was 5.05%, down from 7.45% last year, while Return on Equity (ROE) fell to 9.71%, compared to 14.50% in Q4 of FY 2023/24.

On a per-share basis, EPS (annualized) was Rs. 21.90, a decline from Rs. 34.07 last year, while the reported PE ratio stood at 32.44, slightly higher than last year’s 25.33, reflecting weaker earnings.

From a balance sheet perspective, the book value per share was Rs. 285.75, while the market value per share traded at Rs. 710.36, around 2.5x book value, showing continued investor confidence.

Insurance Business Indicators

• Total issued policy count stood at 291,897, nearly stable compared to 297,186 last year (-1.78% YoY).

• Renewed policies improved to 95,418 (+16.98% YoY), indicating stronger retention of existing clients.

• Total claims paid rose to 10,903 cases (+13.79% YoY), showing higher payouts to policyholders.

• Outstanding claims remained stable at 9,672, almost unchanged from 9,702 last year, indicating steady claim settlement practices.

• Long-term investments were Rs. 1.08 billion, down from Rs. 1.26 billion last year, showing reduced allocation toward longer-tenure assets.

• Short-term investments data appears abnormally high in the report (reported in hundreds of billions % format), suggesting a reporting or formatting issue. Nonetheless, the company continues to maintain significant liquidity reserves.

Dividend for FY 2024/25 has not yet been declared. Last year, Neco distributed Rs. 7.37 per share.