Nepal Life Insurance’s Credit Rating Upgraded to ‘AA’ on Stronger Financial Position

Kathmandu – Nepal Life Insurance Company has received a credit rating upgrade, reflecting improvements in its financial strength, solvency, investment diversification and business performance.

ICRA Nepal has raised the company’s issuer rating from ‘ICRA NP-IR A-’ to ‘ICRA NP-IR AA’. The ‘AA’ rating indicates a high degree of safety in the timely fulfilment of financial obligations and a very low level of credit risk.

Established in May 2001, Nepal Life is one of the leading companies in Nepal’s life insurance sector, with more than two decades of experience, an established market presence and professional management. It held about 27 percent of the life insurance market by gross premium income in fiscal year 2025/26 and has consistently maintained a share above 25 percent. According to ICRA Nepal, it is also the country’s largest life insurer by total assets. The company operates 196 branches nationwide, backed by an extensive agent network, an experienced board and a skilled management team.

The company has also improved its solvency ratio, a key indicator of financial strength. The ratio rose from 145 percent in mid-July 2024 to 154 percent in mid-July 2025, well above the regulatory minimum of 130 percent. This strengthens its capacity to meet obligations and maintain financial stability.

Nepal Life has made progress in diversifying its investment portfolio and improving its quality. As of mid-July 2026, about 18 percent of total investments were in government securities, a category in which it had not invested until the previous year. Around 76 percent were held in fixed deposits. Of these deposits, about 82 percent were placed with investment-grade institutions, and around 13 percent with institutions rated AA- or above. The company has also expanded into debentures and perpetual non-cumulative preference shares (PNCPS), which offer higher interest rates. Together, these accounted for about 6 percent of total investments as of mid-July 2026.

Renewal premiums remain an important foundation for growth. Renewal premium income rose from Rs 37.21 billion in fiscal year 2024/25 to Rs 40.60 billion in 2025/26. Over the same period, gross premium income grew from Rs 48.20 billion to Rs 54.03 billion, and net premium income from Rs 47.69 billion to Rs 53.45 billion. ICRA Nepal noted that continued growth in renewal premiums has given the company stability and sustained momentum despite fluctuations in first-year premium income.

Endowment policies make up the largest share of Nepal Life’s business, accounting for about 98.8 percent of total premium income in 2025/26. This long-term business has supported the growth of the company’s life insurance fund and its market presence.

The total life insurance fund increased from Rs 234.75 billion in 2024/25 to Rs 276.13 billion in 2025/26, while total investments rose from Rs 228.41 billion to Rs 280.56 billion. Over the past three years, the asset base has grown at an average annual rate of about 17 percent.

Operational efficiency has also improved. The ratio of management expenses to gross premium income fell from 6.3 percent in 2024/25 to 6.2 percent in 2025/26. ICRA Nepal attributed this cost control to the company’s large scale, established distribution network and effective operational management.

Nepal Life has also prioritized risk management and reinsurance protection. It has reinsurance arrangements with Nepal Reinsurance Company Limited and Himalayan Reinsurance Limited, covering regular life insurance, microinsurance and catastrophe-related risks. According to the report, the company retains a maximum risk of Rs 2 million per life and holds catastrophe cover of Rs 550 million. Its catastrophe reserve stood at about Rs 1.544 billion as of mid-July 2026. ICRA Nepal noted that these arrangements and reserves provide additional protection against claims from extraordinary events, including natural disasters.

The upgrade reflects improvements in overall business performance, financial indicators, investment diversification, solvency, renewal premium growth and reinsurance arrangements. Experienced management, a nationwide service network and a substantial market share have further strengthened the company’s position in Nepal’s life insurance industry.