Is it justify pay EIC share current market price Rs.2645,20% bonus and 600% right share

1. Sharechart Analysts Team
Presentation on
Nepalese Insurance Sector
FUNDAMENTAL AND TECHNICAL ANALYSIS

3. What is Insurance?
Insurance is concerned with protection of
economic value of assets. Tangible assets are
human beings, house, furniture, motor cycle
etc. Intangible assets are liabilities
History of Insurance
It started from Lloyd’s coffee house London
First policy issued in England in 1583
In Nepal first policy issued in 1936

4. Review of Insurance Industry in Nepal
History of Nepalese non life insurance is Sixty five years and life
insurance is Forty years old. The first general insurance company named "Nepal
Insurance and Transport Company" established in 1947 which is currently
known as Nepal Insurance Company.
Rastriya Beema Sansthan is only composite of both life and non life
insurance company which was established in 1968 and started non life
insurance business in same years but started life insurance business from 1972.
Before 1947, large amount of premium was collected by Indian
insurance companies for long times. After establishment of life insurance
company by Government of Nepal, Indian companies stopped to
collect their premium and phased out their business in Nepal. Before restoration
of multiparty democracy in 1990, there were only five insurance companies
existed whereas, during 17 years period (1991 to 2008), additional 20
insurance companies have been established. Post liberalization period is found
fertile for insurance business. Recently 2017,government of Nepal issued
license more than 10 life insurance and pipeline non-life insurance waiting for
approval by “Beema Samitti”.
Currently, 9 life insurance companies and 17 non-life insurance
companies are operating in the country. Of these companies, The Oriental
Insurance Company and Life Insurance Company are operating as branch
offices of Indian insurance companies.

5. Nepalese Insurance Market Segmentation by Products
There are more than 150 different types of policies that people can choose from. But the
majors are classified under four categories. They are stated bellow:
1.3.1 Life Insurance
In general, life insurance is a type of coverage that pays benefits upon a person’s death
or disability. In exchange for relatively small premiums paid in the present, the policyholder
receives the assurance that a large amount of money will be available in the future to help his or
her beneficiaries pay debts and funeral expenses. Some forms of life insurance can also be
used as a tax-deferred investment to provide funds during a person’s lifetime for retirement or
everyday living expenses. The life insurance includes term, endowment and whole life
insurance.
1.3.2 Non-Life Insurance
Non-life Insurance is also called General insurance, which includes automobile and home
owners policies. It provides payment depending on the loss from a particular financial event.
General insurance typically comprise any insurance that is not determined to be life insurance
1.3.3 Other Products
i. Third Party Insurance: This policy ensures that third parties involved in an incident are
protected. So, for example, if you were to crash into another car and the accident was deemed
to be your fault, then your liability to the driver of the other car would be covered, although you
would not be able to claim for damage to your own. This is particularly the case the driver is
considered by the insurance company to be a high risk, or the car value is low so it is unlikely to
get a pay-out through an insurance claim.
ii. Health Insurance: One of the most important types of insurance to have is health
insurance. Your good health is what allows you to work and earn money and otherwise enjoy life.
If you were to come down with a sickness or have an accident without health insurance you may
find yourself unable to receive treatment or even in debt to the hospital.

6. Players in Life Insurance Companies
Life Insurers Types of Policies
1. Rastriya Beema Sansthan Term, Whole, Endowment
2. National Life Insurance Term, Whole, Endowment
3. Nepal Life Insurance Co. Ltd. Term, Whole, Endowment
4. Met Life ALICO (American Life Insurance Co. ) Term, Whole, Endowment
5. Life Insurance Corporation (Nepal) Ltd. Term, Whole, Endowment
6. Asian Life Insurance Co. Ltd Term Term, Whole, Endowment
7. Surya Life Insurance Co. Ltd Term, Whole, Endowment
8. Guras Life Insurance Co. Ltd Term, Whole, Endowment
9. Prime Life Insurance Co. Ltd Term, Whole, Endowment

7. Players in Non-Life Insurance Companies
Name of Company Name of Major Products
1. Nepal Insurance Co. Ltd Fire, Marine, Engineering, aviation,
Miscellaneous
2. The Oriental Insurance Co. Ltd Fire, Marine, Engineering, aviation,
Miscellaneous, industrial, accidental,
homeowner, Professional & Bankers'
indemnity, Fidelity
3. Rastriya Beema Sansthan Fire, Auto, Aviation, Marine,
Engineering, Medical, Accident, Cash in
Transit, Homeowner, Fidelity, Liability,
Workman Compensation
4. National Insurance Co. Ltd Auto, homeowner, accident, Medical,
Professional Indemnity, Livestock, Crop,
Industrial Line
5. Himalayan General Insurance Co. Ltd Aviation, Indemnity, industrial,
Engineering, Fidelity, Fire, Medical,
Marine, cash, Auto, Liability, travel
6. United Insurance Co.(Nepal) Ltd Marine, Fire, Auto, Fidelity, Indemnity,
Burglary

8. Players in Non-Life Insurance Companies
Name of Company Name of Major Products
7. Premier Insurance Co.( Nepal) Ltd Fire, Auto, Accidental, contractors' all
risk, Overseas medic claim, fidelity, cash
in transit, Homeowner, Loss of profit
8. Everest Insurance Co . Ltd Fire, Marine Auto, Aviation, Engineering,
Miscellaneous
9. Neco Insurance Ltd. Aviation, Engineering, Fire, Marine,
Miscellaneous
10. Sagarmatha Insurance Co. Ltd Fire, theft, marine, auto, contractors all
risk, cash in transit, fidelity, public
liability
11. Alliance Insurance Co. Ltd.(Prabhu) Fire, Indemnity, Medical, Auto, public
liability, aircraft
12. N.B. Insurance Co. Ltd Accident, medical, cash in transit,
fidelity, professional indemnity,
contractor's all risk, fire
13. Prudential Insurance Co. Ltd Marine, auto, Medical, Fidelity, Cash
insurance, homeowner, fire, contractor's
all risk

9. Players in Non-Life Insurance Companies
Name of Company Name of Major Products
14. Shikhar Insurance Co. Ltd Fire, public liability, cash, contractor's all
risk, Medical, Marine, Aviation,
homeowner
15. Lumbini General Insurance Co. Ltd Fire, Marine, auto, Engineering, aviation,
miscellaneous
16. NLG Insurance Company Limited Fire, Marine, auto, engineering,
accidental, aviation
17. Siddhartha Insurance Limited Limited Fire, marine, Auto, Engineering,
Medical, homeowner, cash in transit,
accidental, electronic all risk

10. Regulatory Body
Insurance in Nepal is still in the growth stage despite being 70
years old. There are 9 life insurance and 17 non-life insurance
companies insurance services provide with more than hundreds
branches throughout the country. There are still many areas that the
Nepali insurance sector has not been able to cover, but there is no
denying the act that the sector is witnessing accelerated growth.
Beema Samiti (Insurance Board) an autonomous body, established to
develop, systemize, regularize and regulate the insurance business of
Nepal under Insurance Act, 1992.
Role of Beema Samiti
Protecting the interest of policyholders
Establishing guidelines for the operations of insurers, and brokers
Specifying the code of conduct, qualifications, and training for insurance
intermediaries and agents.
Promoting efficiency in the conduct of insurance business.
Regulating the investment of funds by insurance companies.

11. New Capital Plan for Insurance Companies
S.No Life Insurance Non-Life
Insurance
Deadline
1 Rs 500 million Rs 250 million Before
2 Rs 2 billion Rs 1 billion After
(mid-July 2018)

12. Fundamental Analysis Insurance sector
Non-life Insurance Sector
As being analyst, there is rumor in the market insurance companies are
overvalued comparing with EPS and P/E ratio. First of all traders can know in all sector only
EPS and P/E ratio analysis is not sufficient to invest in stock market.
As for Beema Samiti rule Non-life insurance companies, given below:-
1- An amount not less than 50% of the Net Profit to deposited in the insurance fund and
50% of the profit earned until the amount equals the paid-up capital of the insurer operating
the Non-life Insurance Business.
2- In the case of Marine Insurance, the amount to be deposited to the reserve fund for at
least three years shall not be considered to be profit.
3- An amount of one hundred fifteen percent of the remaining amounts of the payment
against the claim made by the Insurer before the expiry of each fiscal year.
4- The Insurer may spend up to twenty-five percent in the case of Marine Insurance and up
to thirty percent in the case of other Insurance for the management functions out of the total
amount of the income generated from the premium while operating the Insurance Business.
Provided that, the amount spent for the establishment and mechanization of the Insurance
office shall not be included in the management expenses.
Note:-
This means insurance companies financial statements analysis differ from other sectors.

13. Summary of financial status Non-Life Insurance Sector

14. Summary of Policies Non-Life Insurance Sector

15. 5 Years Net profit Analysis Quarterly

16. Technical Analysis Insurance Sector
Note:- In above figure insurance sub-index analysis with technical indicators,ISI moving
at 5471.73 16th Feb. 2017 then slowly moving upward at that time 50 Time FCST
indicator crosses by index with MACD AND WILLIAMS % R support positive indicates.
After few weeks Beema Samiti announcement for insurance sector paid up capital
increment plan. Then ISI hit high up to 9200.96 23rd April 2017,at mind time 50 Time
FCST indicator crosses below index with MACD AND WILLIAMS % R support negative
indicates which is valid till now index is indicating with 8377.71.And another indicator
accumulation and distribution indicator time to distribution i.e. selling pressure indicates.

17. Comparative Analysis Insurance sub-index
vs.
stock symbols
In the above figure, insurance sub-index vs. stock symbols analysis 1 month ,during
time overall index negative returns but EIC,NBIL AND HGI return 19%,9% and 7%
respectively. As our analysts team watch list, we found there is fundamental news
influence at the time EIC announced 20% stock dividend and 600% right share,
NBIL movement not any news only price increment without volume and
lastly HGI right share 166% approved from SEBON.
All 3 stock movement only by fundamental aspect.

18. Is it justify pay EIC share current market price
Rs.2645,20% bonus and 600% right share.....
Facing reality and Truly understanding it Brings success
Moving Avg Below
MACD SIDEWAYS
OVER BOUGHT ZONE
DISTRIBUTION TIME
CMP-2645
TREND-Over bought zone
MOVEMENT-Sell

19. Summary FA & TA
In summary fundamental analysis, Insurance sector non-life
insurance sector paid up capital increment 4 times before increment 25
crore but now 1 Arab. Recent paid up capital 10 crore where they couldn’t
met before paid up capital too. As for recent 3rd quarter report earned 2
crore 11 lakh only which is lowest among 15 insurance companies report.
As our 5 years net profit quarterly analysis also shows weak trend quarter
to quarter return which is shown grey color. And most important factor for
insurance sector is about there policies holding with lowest premium
collection with lowest policies holding and renew policies.
As per technical analysis, Insurance sector is making lower
high from 9500 index. Now insurance index is moving below with
8377.71.All the technical indicators also following respectively.
Comparative analysis shows different analysis EIC,NBIL AND HGI return
high with 19%,9% and 7% respectively. Lastly EIC in-depth analysis shows
price increasing but MACD indicates negative divergence, williams%R
indicator indicates over bought zone and accumulation and distribution
indicators indicates time to distribution.
Overall analysis shows as for past data EIC seems weak.
Hope for the best good after increment capital plan.

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