13 Listed Life Insurers Yet to Declare Dividends; Average Dividend Capacity Stands at Around 14%

Kathmandu — None of the 13 listed life insurance companies has declared dividends from its profits for the fiscal year 2025/26. Investors are increasingly interested in how much dividend each of these life insurers, excluding microinsurance companies, can afford to distribute.

Based on the financial statements published by the companies, the average dividend distribution capacity of the 13 life insurers stands at around 14 percent.

Twelve of the companies, excluding Citizens Life Insurance, have disclosed their distributable profits. In the case of Citizens Life, its accumulated earnings suggest that it may be able to distribute a dividend of slightly more than 9 percent.

How Is the Dividend Capacity of Life Insurance Companies Determined?

Because life insurance operates differently from other business sectors, the process of calculating its dividend capacity is also distinct.

Actuarial Valuation: Since the liabilities associated with life insurance policies do not expire within a single year, the actual amount available for distribution can only be determined after an actuarial valuation. While such valuations were previously conducted every three years, companies are now required to carry them out annually.

Distribution of Surplus: Following the actuarial valuation, the amount remaining after deducting future obligations to policyholders is calculated as surplus. Under the Nepal Insurance Authority’s provisions, at least 90 percent of this surplus must be allocated for policyholder bonuses, while a maximum of 10 percent can be transferred to the shareholders’ fund. However, this provision may not apply to all types of insurance policies.

Regulatory Requirements: The transfer of funds to the shareholders’ fund does not automatically mean that a company can distribute dividends. Before declaring dividends, companies must also meet requirements relating to their actual financial condition, capital adequacy and other regulatory conditions set by the Nepal Insurance Authority.

Although brief financial statements published in newspapers do not always clearly disclose distributable amounts, companies have increasingly started including distributable profit figures in the quarterly financial statements published on their websites.

However, the dividend capacity reflected in these financial statements does not necessarily represent the final dividend rate that a company will declare.