Nepal Micro Insurance Company’s Annual Profit Falls 43.91% Despite Surge in Premium Income

Nepal Micro Insurance Company Limited (NMIC) has published its unaudited financial results for the fourth quarter of fiscal year 2081/82, showing a significant decline in net profit compared to the same period last year, despite strong growth in premium income and total revenue. The drop in profit is mainly due to steep rises in claims and overall expenses.

Profit Decline Despite Revenue Growth
As of Ashad-end 2082, NMIC posted a net profit of NPR 1.66 million, down 43.91% from NPR 2.95 million in the previous fiscal year. This decline came even as net earned premium skyrocketed by 310.36% to NPR 76.07 million from NPR 18.54 million, and total income doubled by 103.13% to NPR 145.58 million from NPR 71.67 million.

Rising Claims and Expenses Erode Earnings
The company’s total claims incurred surged 377.01% to NPR 27.53 million, up from NPR 5.77 million last year. Likewise, total expenses more than doubled — rising 110.25% to NPR 141.82 million from NPR 67.45 million — putting considerable pressure on profitability. The sharp increases in claims payouts and operational costs offset the gains from higher premium collections.

Earnings Per Share and Financial Position
Earnings per share (EPS) fell by NPR 0.34 to NPR 0.22, compared to NPR 0.56 last year, reflecting the weaker profit performance. The company’s net worth per share stood at NPR 99.86 at the end of the review period.

Capital and Reserves
NMIC’s paid-up capital increased 42.86% to NPR 750 million. Special reserves rose sharply by 1,092.82% to NPR 4.32 million, while catastrophe reserves dropped 86.09% to NPR 0.43 million from NPR 3.10 million last year. Retained earnings were negative at NPR -5.70 million, compared to a positive NPR 3.66 million previously. Other equity was also in the red at NPR -0.093 million, signaling financial pressure.

NMIC’s FY 2081/82 results reflect a challenging year in terms of profitability, even though business volumes and premium collections increased substantially. The significant rise in claims payouts and operating expenses indicates higher risk exposure and possibly higher claims frequency. While the expansion in paid-up capital and special reserves strengthens the company’s capital base, the negative retained earnings and other equity highlight the need for tighter cost control and improved underwriting practices. Going forward, sustainable growth will depend on balancing premium growth with effective claims management and expense control to restore profitability.