DETERMINATSOFPROFITABILITYOFLIFE INSURANCECOMPANIESINNEPAL

Abstract

This researchanalyzesthedeterminantsofprofitabilityinfiveNepaleselifeinsurance companies—LIC, NLICL,MET,ALICL,andNaLICL—from2013/14to2022/23,using secondarydatafromannualreportsandtheinsuranceauthority’swebsite.Keyfinancial metricsconsideredincludecompanysize,liquidity,capitalvolume,growthrate,returnon assets (ROA),andreturnonequity(ROE). KeyfindingsindicatethatLICandNaLICLshowstablegrowthandlargersizes,whileAL- ICL, MET,andNLICLexhibitmorevariability.ALICLmaintainsstableliquidity,whereas LIC andMETshowhighvariability,suggestinganeedforbetterliquiditymanagement.LIC and ALICLhavesignificantcapitalfluctuations,reflectingaggressiveinvestmentstrategies, while METismoreconservative.ALICLleadsinfixedassetinvestmentsbutwithhigh variability;LICandMETshowlowerandstablefigures. NLICL hasthehighestgrowthpotentialbutthemostvariability,indicatingahigh-risk, high-rewardscenario.LICandMETprovidemorestablegrowth.METoutperformsin ROA,indicatingeffectiveassetutilization,whileLIChasthehighestaverageROEbut significant fluctuations. Company-specificinsightsrevealstrongcorrelationsbetweenfinancialdeterminantsand profitability forallfirms,withliquidityandfixedassetsparticularlyinfluencingLICand MET’sperformance.Theseinsightshaveseveralimplications: Investorscanassessrisk-adjustedreturns,withNLICLappealingtothoseseekinghigh returnsandwillingtotoleratefluctuations.ALICLandNaLICLofferbalancedoptions, while METrepresentsaconservativechoice.Regulatorscanevaluatefinancialstability and riskprofilestoinformpolicies.Analystscanprovideinformedrecommendationson financial healthandinvestmentpotential.Competingcompaniescanbenchmarkfinancial strategiesforimprovementorcollaboration.Thestudyunderscorestheimportanceof efficient managementofsize,capital,assets,liquidity,andgrowthinenhancingprofitability, providingactionableinsightsforstrategicdecision-makingandriskmanagementinNepal’s lifeinsurancesector.