Nepal Reinsurance Company’s Financial Shock: Heavy Claims Push State-Backed Insurer Into Rs 5.84 Billion Loss

Kathmandu — Nepal Reinsurance Company Limited, a key institution in Nepal’s insurance sector with government ownership, has faced a major financial setback after recording a loss of Rs 5.84 billion in the first nine months of the fiscal year 2025/26. The latest financial figures reveal that rising claim obligations and declining income sources have significantly weakened the company’s financial performance.

The scale of the decline is notable compared to the previous year. During the same period last year, the company had reported a profit of Rs 548.2 million. The sudden shift from profit to a multi-billion-rupee loss highlights the growing pressure faced by the reinsurance sector, where large-scale claims can directly affect profitability.

The main reason behind the loss was a sharp increase in net claim payments. The company’s claim expenses more than doubled, rising from Rs 5.17 billion in the previous year to Rs 10.83 billion during the review period. As a reinsurance company, Nepal Re’s role is to absorb risks transferred from insurance companies, meaning large disasters, major insurance events or concentrated claims can create significant financial pressure.

Despite the overall loss, the company showed signs of recovery in the latest quarter. During the third quarter alone, Nepal Re reported a profit of Rs 2.14 billion. However, the strong quarterly performance was not enough to offset the heavy losses accumulated during earlier periods.

The company also faced pressure from declining investment returns. As interest rates declined in the banking sector, income generated from investments dropped significantly. Investment earnings fell from Rs 942.6 million to Rs 475.4 million, reducing another major source of revenue for the company.

Insurance income also weakened during the period. Net earned premiums declined from Rs 7.11 billion to Rs 5.83 billion, indicating pressure on business growth and premium collection. The combination of lower premium income, reduced investment returns and higher claim payments created a difficult operating environment.

The impact has also been reflected in shareholder indicators. The company’s earnings per share (EPS) turned negative at Rs 43.51, compared to a positive EPS of Rs 4.08 in the previous year. Its accumulated reserve fund moved into a negative position of Rs 4.90 billion, showing the extent of financial pressure created by the loss.

However, the company still maintains a strong capital base, with paid-up capital of Rs 13.42 billion. Its net worth per share stands at Rs 109.20, indicating that the company retains a significant asset base despite the current financial challenges.

The latest results raise questions about risk management and long-term sustainability in Nepal’s reinsurance industry. Large claim exposure, dependence on investment income and changing interest rate conditions have emerged as major challenges for the company.

For Nepal’s insurance market, the performance of Nepal Re is particularly important because the company plays a central role in managing risks within the domestic insurance system. A financially stable reinsurance sector helps insurance companies handle major claims and supports confidence in the overall financial ecosystem.

Going forward, the company’s recovery will depend on improving underwriting quality, controlling claim costs, expanding profitable insurance portfolios and strengthening investment strategies. While the latest figures show significant short-term pressure, effective risk management and operational improvement will determine whether Nepal Re can return to sustainable profitability.