Sanima GIC Insurance (NEPSE: SGIC) — Company Profile

Business Description

Full legal name: Sanima GIC Insurance Limited NEPSE ticker: SGIC Sector: Non-Life Insurance Incorporated: 2064.03.07 (2007 CE); NIA license dated 2074.10.25 Merger operational start: October 24, 2022 (Kartik 7, 2079 BS)

Sanima GIC Insurance Limited is the surviving legal entity from the merger of Sanima General Insurance Limited (the acquirer) and General Insurance Company Nepal Limited (GIC Nepal, the absorbed entity). (Source: SGIC 6th Annual Report FY 2079/80, Note (x) Business Combinations — Primary, audited.)

The company offers: property (fire and allied perils), motor (third-party and comprehensive), marine cargo, engineering and construction, micro-insurance, aviation, cattle and crop, and miscellaneous (group personal accident, medical, professional indemnity). (Source: SGIC 6th Annual Report FY 2079/80, Accounting Policy Note (o) — Primary.)

As of FY 2081/82, SGIC operates through 60+ branches across all seven provinces. The CARE Ratings October 2024 report confirms 36 branches (including head office) and 30 sub-branches, with 185 insurance agents as at mid-July 2024. (Source: CARE Ratings Nepal, October 2024 — Secondary; SGIC 8th Annual Report — Primary.)

Lead reinsurer. Hannover Rückversicherung AG, Malaysia branch (A+ rated by S&P), is the whole-account quota share and surplus treaty reinsurer. SGIC has reinsurance agreements with 12 reinsurance companies for FY 2081/82. (Source: CARE Ratings Nepal, October 2024; SGIC 6th Annual Report — Primary.)

CEO. Sudyumna Prasad Upadhyaya (25+ years of general insurance experience; former CEO of Premier Insurance Company). (Source: CARE Ratings Nepal, October 2024 — Secondary.)

Credit rating. CARE-NP BBB+ (Is) [Triple B Plus, Issuer Rating], assigned October 2024. (Source: CARE Ratings Nepal, October 2024 — Secondary.)

Post-Merger Financial Summary

Note: FY 2078/79 figures are the standalone accounts of Sanima General Insurance Limited (pre-merger). FY 2079/80 through FY 2081/82 are the merged entity. All amounts in NPR millions.

Sources: 5th Annual Report FY 2078/79 (Sanima General standalone), 6th Annual Report FY 2079/80 (SGIC merged entity), 7th Annual Report FY 2080/81, 8th Annual Report FY 2081/82 — all company self-reported, audited by N. Amatya & Co. EPS arithmetic: FY 2079/80 = NPR 273.5M / 20.0M shares = NPR 13.68. FY 2081/82 = NPR 336.8M / 21.5M shares = NPR 15.66 (share count increased from 20.0M to 21.5M via bonus shares). ROE = PAT / Average Equity (Derived).

GWP trajectory. GEP tripled in the first full merged year (FY 2079/80) to NPR 2,102.9M as GIC Nepal's premium book consolidated. GEP then grew 19.5% in FY 2080/81 and was essentially flat in FY 2081/82 (+0.8%), suggesting the post-merger growth burst has plateaued while the sector as a whole grew 12.44% in FY 2081/82. (Source: SGIC Annual Reports — Primary; sector GWP from NIA indicator.xlsx — Primary.)

Underwriting Economics — Net Combined Ratio

All ratios on the net basis. Loss Ratio = Net Claims Paid / NEP. Broad Net Expense Ratio = (Commission Expenses + Service Fees + Other Direct Expenses + Employee Benefits + Depreciation + Other Operating Expenses + Finance Cost − RI Commission Income) / NEP. Sources: SGIC 5th–8th Annual Reports — Primary, audited. Arithmetic verified from P&L line items.

How the model works. SGIC retains approximately 27–30% of gross premium (net retention) and cedes 70–73% to reinsurers. Reinsurers pay SGIC commission income on the ceded premiums — in FY 2081/82 this was NPR 410.2M on NEP of NPR 764.3M (54% ratio). The commission income more than covers all acquisition costs, meaning the broad expense ratio is held to approximately 24–25% despite the company's operating cost base. Net of reinsurance, SGIC earns underwriting profit in every year reviewed.

Cost of float. Float (Gross Insurance Contract Liabilities minus Reinsurance Assets) at FY 2081/82 year-end: approximately NPR 832 million (the smallest of the three analyzed non-life insurers). Cost of float approximately −23% in FY 2081/82 (Derived from audited balance sheet and P&L data). (Source: SGIC 8th Annual Report balance sheet — Primary.)

Quarterly Performance — FY 2082/83

Source: SGIC Q1, Q2, Q3 FY 2082/83 Quarterly Reports — company self-reported, unaudited.

Q1 catastrophe impact. Net Claims Paid in Q1 alone were NPR 277.4M — nearly 71% of full-year FY 2081/82 net claims of NPR 389.0M. The sector as a whole provisioned approximately NPR 20.7 billion in claims from the Bhadra 2082 floods and civil unrest. (Source: ICTFrame citing NIA data; Beema Post May 2026 — Secondary.)

Notable balance sheet items. Gross Insurance Contract Liabilities jumped to NPR 4,478.9M at Q3 end from NPR 4,104.7M at FY 2081/82 year-end — a 9.1% increase over nine months, reflecting ongoing flood claims provisioning. Q1 quarterly report explicitly states: "LAT [Liability Adequacy Test] is not carried out and amount provided is based on estimation." (Source: SGIC Q1 FY 2082/83 Quarterly Report — Primary, unaudited.)

Market Position

NIA primary market share (9M FY 2082/83): 5.74%, ranked #10 of 14. GWP of NPR 208.2 crore (NPR 20,820 lakh) out of a 14-company total of NPR 3,628 crore. (Source: NIA province×company quarterly xlsx files, Q3 FY2082/83 — Primary.)

CARE Ratings (October 2024) estimated SGIC held approximately 6.31% market share (8th position) among 18 entities at FY 2080/81 year-end. The decline from 6.31% (FY 2080/81) to 5.74% (9M FY 2082/83) and the drop from 8th to 10th position in the ranking is corroborated by both sources. (Source: CARE Ratings Nepal, October 2024 — Secondary; NIA primary data — Primary.)

Motor segment concentration. Motor comprised 63.55% of total policies in FY 2081/82 (down from 69.73% in FY 2079/80), per CARE Ratings. Motor is the primary earnings volatility source given regulated pricing and high claims frequency. The declining share reflects portfolio diversification effort. (Source: CARE Ratings Nepal, October 2024 — Secondary.)

The sector context is described in the Nepal Non-Life Insurance Sector Overview, which includes the full 14-company market share table.

Regulatory Framework

Capital requirement shortfall. NIA requires a minimum paid-up capital of NPR 2.5 billion for non-life insurers. SGIC's paid-up capital is NPR 2.15 billion — NPR 350M below the requirement. CARE Ratings (October 2024) noted a planned rights issue to raise capital to NPR 2.5 billion. As of June 2026, the capital raise had not been completed. (Source: CARE Ratings Nepal, October 2024 — Secondary; NIA minimum capital from secondary web search and NIA Annual Report text — Primary/Secondary.)

Mandatory cession schedule. Under the NIA Reinsurance of Insurers Directive 2080, SGIC cedes 6% of claim amounts to each domestic reinsurer (Nepal Re and HRL) in FY 2081/82, declining to 4% in FY 2082/83. (Source: CARE Ratings Nepal, October 2024, quoting SGIC data — Secondary.) However, the FY 2083/84 federal budget (presented May 2026, effective July 17, 2026) reinstates a mandatory 20% cession of insurers' direct insurance portfolio to Nepal Reinsurance Company (Nepal Re), reversing the declining schedule and reviving the 20% rate first introduced May 29, 2018 and cut May 19, 2022. The 20% is specified to Nepal Re; the announcement does not mention a separate Himalayan Re (HRL) allocation, and an implementing directive had not been published as of June 2026. (Source: Beema Post, "Government to Reinstate Mandatory 20% Reinsurance Placement With Nepal Reinsurance Company," May 2026, https://en.beemapost.com/2026/05/13675/ — Secondary; FY 2083/84 Budget — Primary.)

Catastrophe and Special Reserve. 10% of net profit annually to Catastrophe Reserve and 50% of distributable profit to Special Reserve per NIA directives. SGIC's Catastrophe Reserve at FY 2081/82: NPR 45.9M; Special Reserve: NPR 749.6M. (Source: SGIC 8th Annual Report, Notes 17(e) and 6(j)(viii) — Primary.)

Solvency. Minimum solvency margin ratio of 1.50× per NIA. SGIC reported 5.85× at Q3 FY 2082/83 end — well above the minimum. (Source: SGIC Q3 FY 2082/83 Quarterly Report — Primary, unaudited.)

NFRS 17 status. SGIC has not disclosed a specific timeline for NFRS 17 adoption. FY 2082/83 is the first mandatory NFRS 17 year for all non-life insurers. SICL is the sector's first mover; SGIC's approach is not yet disclosed. (Source: NIA mandate; SGIC quarterly reports — Primary.)

Governance and Ownership

Promoter structure. Promoters hold approximately 70% of shares as of FY 2079/80: approximately 23% institutional promoters (Nepali organized institutions) and 47% Nepali citizens. General public holds 30%. (Source: SGIC 6th Annual Report, Note 17(a) — Primary.)

Sanima Group affiliation. Sanima Pvt. Ltd. holds approximately 5.5% and Sanima Bank Ltd. holds approximately 5%, collectively part of a Sanima Group holding of approximately 22.69% as of mid-July 2024. (Source: SGIC 6th Annual Report Note 17(a) — Primary; CARE Ratings Nepal, October 2024 — Secondary.)

Board. Chairman Kunal Kayal (CA, LLB & MBA). Seven board members including three public directors and one independent director. (Source: SGIC 8th Annual Report signatory block — Primary.)

Merger goodwill. SGIC recognized NPR 40.1M in goodwill on the GIC Nepal acquisition, carried at NPR 42.4M as of FY 2081/82. (Source: SGIC 6th Annual Report, Note 4 — Primary.)

Capital Allocation

Dividend record:

Cash dividend yield at NPR 486.70: approximately 0.054% (NPR 0.263 per share). (Derived: 0.2632% × NPR 100 / NPR 486.70.)

Capital issuances. Paid-up capital grew from NPR 1 billion (pre-merger Sanima General) to NPR 2 billion via the merger rights issue (FY 2079/80), then to NPR 2.15 billion via a 7.5% bonus share (FY 2081/82). A 5% bonus share is pending AGM approval for FY 2081/82 results. (Source: SGIC Annual Reports; Sharesansar, March 2026 — Secondary.)

Investment yield trend. Average investment yield declined from 9.80% (FY 2079/80) to 8.24% (FY 2080/81), per CARE Ratings. Investment income fell from NPR 258.4M (FY 2080/81) to NPR 170.2M (FY 2081/82) despite a growing portfolio (NPR 3,405.5M). (Source: CARE Ratings Nepal, October 2024 — Secondary; investment portfolio from SGIC 8th Annual Report — Primary.)

Key Risks

Capital shortfall and dilutive issuance. SGIC must raise approximately NPR 350M to meet the NPR 2.5 billion minimum capital requirement. A rights issue will dilute EPS further. FY 2081/82 EPS was NPR 15.66, already below FY 2080/81's NPR 15.91 despite higher absolute profit, because the share count grew from 20.0M to 21.5M shares. (Source: SGIC 8th Annual Report; NIA directive — Primary/Secondary.)

Market share erosion. SGIC ranked 10th of 14 by 9M FY 2082/83 GWP, down from 8th at FY 2080/81 year-end. Full-year GWP was essentially flat in FY 2081/82 (+0.8%) while the sector grew 12.44%. A smaller premium base means less reinsurance commission income, higher expense ratios as fixed costs are spread over smaller NEP, and reduced underwriting leverage. (Source: SGIC Annual Reports — Primary; NIA primary data — Primary.)

Catastrophe and reserve adequacy. Q1 FY 2082/83 net claims of NPR 277.4M exceeded full-year FY 2081/82 net claims of NPR 389.0M by the close of Q1. The quarterly report's explicit statement that the Liability Adequacy Test was not performed in Q1 creates uncertainty about whether provisions were actuarially adequate at that point. (Source: SGIC Q1 FY 2082/83 Quarterly Report — Primary, unaudited.)

Investment income compression. Investment income fell 34% in FY 2081/82 despite a growing portfolio. As NRB deposit rates remain below historical peaks, the investment cushion supporting PAT may compress further. (Source: SGIC Annual Reports; CARE Ratings Nepal, October 2024 — Primary/Secondary.)

Reinsurance treaty renewal. SGIC cedes approximately 70% of GWP to reinsurers, with Hannover Re as lead. If treaty terms harden after the Bhadra 2082 losses, commission rates would fall directly, reducing the commission income that currently covers most of SGIC's operating cost base. This risk is flagged but not confirmed from any disclosed source.

Valuation Context

All market data from Merolagani, accessed June 15, 2026. These are reference prices, not recommendations.

The Q3 YTD annualized EPS is approximately NPR 4.25 (NPR 3.19 for nine months × 4/3), distorted by the Q1 catastrophe. The FY 2081/82 trailing EPS of NPR 15.66 is the appropriate normal-year reference.

A forward scenario: if FY 2082/83 full-year PAT recovers to NPR 150–200M (Estimate based on Q2–Q3 run-rate), EPS would be approximately NPR 6.6–8.9. If FY 2083/84 normalizes to the FY 2081/82 PAT level (NPR 337M), EPS would be approximately NPR 14.9 on the current share base. At 20–25× normalized EPS, the implied valuation range would be NPR 298–373 per share. All figures are Estimates based on stated assumptions; what would invalidate: a second major flood or catastrophe, NIA capital requirement increase, or significant investment yield deterioration.

What We're Watching

1. Capital raise timeline. The pending NPR 350M capital raise to meet the NIA minimum is the most time-sensitive regulatory item. Until completed, SGIC operates below the statutory minimum. The structure of the raise (rights issue versus bonus shares) will determine the magnitude of EPS dilution.

2. FY 2082/83 full-year audited results. The audited annual report will reveal: (a) whether Q1 catastrophe provisions were set at the right level or require further strengthening; (b) full-year PAT and EPS; (c) NFRS 17 transitional adjustments; and (d) the final reinsurance recovery quantum from the Bhadra 2082 events.

3. GWP growth recovery. Whether SGIC can reverse its declining market share rank (8th to 10th) will determine the trajectory of reinsurance commission income — the structural pillar of its profitability. GWP growth strategy is not detailed in publicly available sources as of June 2026.

References