Shikhar Insurance Q4 Results: Revenue Growth Sustained, Profit Margins Ease Amid Rising Claims

Shikhar Insurance Company Limited (SICL), one of Nepal’s leading non-life insurers, has published its audited Q4 results for FY 2024/25, showing healthy revenue growth and stable operations, although profitability margins narrowed compared to last year due to rising claims.

The company posted a total revenue of Rs. 2.71 billion in Q4, a 12.93% year-on-year increase compared to Rs. 2.55 billion in the same quarter last year. Revenue also expanded from Rs. 1.84 billion in Q3, reflecting steady momentum despite challenges in the insurance sector.

The gross profit stood at Rs. 1.55 billion, with a gross margin of 57.26%, slightly lower than 59.95% in Q4 of FY 2023/24, and also below the peak 64.16% reported in Q2. The moderation indicates pressure from higher operating and claim-related costs.

Net income came in at Rs. 452.72 million, down 11.75% YoY from Rs. 513.02 million in Q4 last year. The net margin stood at 16.73%, compared to 20.13% a year ago, showing that profitability has weakened even as revenue increased.

Return indicators also softened. Return on Assets (ROA) was 3.43%, compared to 4.42% last year, while Return on Equity (ROE) came in at 8.04%, down from 9.79% a year earlier.

On a per-share basis, EPS (annualized) was Rs. 15.49, lower than Rs. 19.33 in Q4 of last year. The PE ratio stood at 49.95, suggesting high market valuation despite slowing earnings. The book value per share increased to Rs. 335.50 from Rs. 311.39 last year, while the market value per share rose to Rs. 773.54, indicating investor confidence in long-term stability.

Insurance Sector Performance

• Issued policies stood at 309,863, slightly down 2.30% YoY, reflecting a slowdown in new business.

• Renewed policies improved to 95,158 (+11.94% YoY), showing stronger policyholder retention.

• Claims paid decreased to 22,431 (-13.66% YoY), easing some strain but still reflecting significant payout levels.

• Outstanding claims increased to 12,507 (+7.72% YoY), indicating pending liabilities.

• Long-term investments stood at Rs. 1.53 billion, down from Rs. 1.75 billion last year, while short-term investments were reported at very high levels (in percentage form, suggesting possible reporting anomalies).

Dividend for FY 2024/25 is yet to be declared. Last year, SICL distributed Rs. 10.53 per share.