ICRA Nepal has reaffirmed the issuer rating of Citizen Life Insurance Company Limited (CLI) at [ICRANP-IR] BBB+. The rating indicates a moderate level of safety in the timely servicing of financial obligations, although the company remains exposed to moderate credit risk.

The rating affirmation is supported by strong premium growth, an expanding market presence and stable solvency. However, declining investment yields, competitive pressure and regulatory changes remain key factors affecting the company’s financial profile.

Citizen Life reported Gross Premium Earnings (GPE) of approximately Rs. 9.374 billion in FY2026, representing around 24% growth compared with industry growth of about 13%. The company accounted for approximately 4.6% of the industry’s total GPE and 6.2% of First Year Premiums (FYP) during the year.

Investment-oriented endowment policies continued to dominate the company’s portfolio, contributing around 91% of total gross premiums. Its policy renewal rate remained healthy at approximately 88%.

Profitability also improved, with net profit after tax rising to Rs. 391 million in FY2026 from Rs. 189 million in FY2025. The previous year’s profitability had been affected by significant deferred tax adjustments.

ICRA Nepal highlighted Citizen Life’s relatively conservative investment portfolio as a key strength. The insurer had an investment book of approximately Rs. 31.8 billion, with around 77% invested in fixed deposits and debentures of Class-A commercial banks.

The company also reported a regulatory solvency ratio of 1.73x as of mid-July 2025, above the Nepal Insurance Authority’s minimum requirement of 1.30x. Its reinsurance arrangements with Nepal Reinsurance Company Limited, including a Rs. 200 million annual aggregate catastrophic cover, provide additional protection against large loss events.

However, investment yields remain a key pressure point. Lower interest rates in Nepal’s banking sector reduced Citizen Life’s average investment yield to 7.8% in FY2026, compared with 9.0% in FY2025 and more than 10% in earlier years. Around 28% of the company’s bank fixed deposits are also scheduled to mature within one year, creating potential reinvestment pressure on future returns.

ICRA Nepal also noted Citizen Life’s relatively shorter operating history. The company has been operating since October 2017, giving it a more limited track record compared with some established players in Nepal’s 14-company life insurance industry.

The implementation of Risk-Based Capital directives and NFRS 17 accounting standards also remains an important area to monitor as the regulatory framework evolves.