National Life Insurance financial analysis: life fund BDT 70bn, EPS set by actuarial surplus, maturity claims up (Oct 2026)

Investment considerations: a growing, under-budget agency franchise whose shareholders earn the actuary's slice of the surplus

National Life Insurance PLC (NLI) sells individual life policies in Bangladesh, mostly endowment-type savings plans sold by agents. It has four retail lines: ordinary life, Jana Bima (micro-insurance), Islami Takaful and National Pension Deposit Insurance (NPDI), plus a small group book [1 p.183]. It was incorporated on 12-Feb-1985 and is listed on the Dhaka and Chittagong stock exchanges [2 p.6]. In 2025 it wrote BDT 23,407m of gross premium, up 11.1%, and its life fund reached BDT 70,183m [1 p.251] [1 p.252].

The key to reading a Bangladeshi life insurer is that the life fund belongs mainly to policyholders. Premiums and investment income go into the life fund; claims, commissions, expenses, tax and the dividend come out of it [1 p.183] [1 p.185]. Every year an actuary values the policy liabilities and declares a surplus. Most of that surplus goes to policyholders as bonuses, and a slice is made available to shareholders. That slice is NLI's earnings: EPS of BDT 3.70 in 2025 is BDT 401.9m of shareholders' surplus divided by 108.5m shares [1 p.222]. Premium growth and fund growth therefore reach shareholders only through the actuary's split, not line by line.

Business: an agency-sold savings book, 72% renewals, 1% group

NLI's premium comes from four individual product families. In 2025 ordinary life wrote BDT 4,293m of first-year premium and BDT 11,703m of renewals; Jana Bima, the micro-insurance line with small, frequent premiums, wrote BDT 1,168m and BDT 3,020m; Islami Takaful BDT 521m and BDT 1,420m; and NPDI BDT 312m and BDT 702m [1 p.183]. Group life and other premium was only BDT 268m, 1.1% of the total [1 p.251]. So NLI is almost entirely an individual, agency-sold business, unlike Pragati Life, where group and health premium was BDT 1,375m, 21% of its premium [7 p.126].

The products are long. Of the 2025 first-year premium, BDT 3,343m (53%) came from policies with premium terms of twelve years or more and BDT 1,711m from ten-year terms; single-premium policies were BDT 887m, almost double the BDT 461m of 2024 [1 p.183]. Long terms matter for two reasons: renewal premium dominates the top line (72% of gross premium in 2025), and the maturity claims of today are the sales of ten to fifteen years ago [1 p.251] [10].

Distribution is through a commissioned agent force. First-year commission was BDT 2,599m in 2025, 41.3% of first-year premium on our calculation (the company's KFI ratio is 39.60%), against 45-50% in 2016-2020 on our calculation; commission on renewals is much lower (5.4% in the second year and 4.7% from the third) [1 p.251] [5 p.125]. The company sold 305,698 new policies in 2025, about the same number as in 2022 (306,693) [1 p.253]; growth in first-year premium has therefore come from larger policies rather than more of them.

Regulation shapes the economics. The accounts follow the Insurance Act 2010 and the Insurance Rules 1958 alongside IFRS, and there is no separate profit and loss account for shareholders: everything runs through the life revenue account and the life fund [1 p.164] [1 p.183]. Investments follow the Life Asset Investment Regulations 2019, which is why most of the fund sits in government bonds and bank deposits [1 p.158]. Income tax is assessed under the Fourth Schedule of the Income Tax Act 2023 and charged to the revenue account [1 p.195]. For a shareholder this means three regulated steps stand between a premium taka and a dividend taka: the IDRA expense limit, the actuary's valuation of liabilities, and the surplus split.

Premium and persistency: renewal ratio near 81%, second-year lapses down to 40%

Gross premium grew by 11-18% a year from 2019 to 2025 [1 p.251] [5 p.125]. First-year premium is the more volatile part: +22.4% in 2019, +7.7% in 2020, +21.4% in 2021, then +5.8% in 2024 and +9.7% in 2025. Renewal premium grew more evenly, 11-17% a year since 2020, because it follows the stock of policies already sold. In H1 2026 both accelerated: first-year premium +22.7% and gross premium +23.4% on H1 2025, with ordinary life first-year premium up 28.5% [2 p.2] [10].

Persistency is the main question for a savings book. A simple measure is the renewal ratio: this year's renewal premium divided by last year's first-year plus renewal premium. It was 80.6% in 2025 and has stayed in a 79.6%-84.9% band since 2017, with 2021 the high point [10]. The IDRA conservation ratio, which the company reports, was 81.76% in 2025 against 86.20% in 2021 [1 p.251]. Both say the same thing: roughly one premium taka in five does not come back the following year.

The IDRA lapse ladder shows where business is lost. By number of policies, 39.93% had lapsed by the second policy year in 2025, 45.88% by the third, 50.26% by the fourth and 57.80% by the sixth [1 p.251] [1 p.252]. The trend is better than it was: the second-year lapse ratio was 52.87% in 2016 and the sixth-year 66.57% [5 p.126]. By premium amount the second-year ratio was 39.98% in 2025 against 49.52% in 2016. The company notes that micro-insurance and ordinary life lapse differently, which pushes some ratios up [5 p.126].

The cohort tables confirm the pattern. Of the 296,699 policies issued in 2021, 174,915 renewed in 2022 and 134,319 were still renewing in 2025, 45% of the original count; the 2021 cohort's renewal premium peaked at BDT 2,397m in 2023 and was BDT 2,193m in 2025 [1 p.253]. Each cohort therefore keeps a little over half its premium after four years. The renewal line grows because each new cohort is larger than the one that matures or lapses, not because old cohorts stay.

Expenses: 12% under the IDRA limit in 2025, but the headroom has shrunk three years running

IDRA caps how much a life insurer may spend on management, which includes commission, salaries and office costs; the cap ('allowable management expenses') is calculated from the premium mix and printed in each annual report [1 p.251]. NLI spent BDT 6,229m in 2025 against an allowable BDT 7,076m, 12.0% below the limit. It was further below in 2021-2022 (22% under) and the margin has narrowed each year since, to BDT 846m in 2025 from BDT 1,209m in 2022 [1 p.251] [10].

It was not always under the cap. In 2016, 2017 and 2018 NLI spent 1.44%, 0.75% and 0.65% more than allowed [5 p.125]. The allowable figure then rose from BDT 2,967m (2018) to BDT 4,071m (2019), 37% in one year, while actual spending rose 15%, and the company has been under the cap since [5 p.125]. The overall expense ratio has fallen from 31.7% of gross premium in 2019 to 26.6% in 2025 [1 p.251].

Commission is the largest item: BDT 3,417m in 2025, 14.6% of gross premium (agents' commission BDT 2,218m plus allowances BDT 1,199m) [1 p.184]. Salaries were BDT 1,739m (+8.7%), and the 'renewal expense ratio' the company reports rose from 5.38% (2022) to 9.98% (2025), which shows that servicing the in-force book is getting more expensive [1 p.251] [1 p.184]. Each 1pp of gross premium spent on management cost BDT 234m in 2025, more than half of the shareholders' surplus of BDT 402m [10].

Life fund and investments: +17% in 2025, 58% in treasury bonds, yield 9.2%

The life fund grew 17.0% in 2025, by BDT 10,221m, the fastest in the ten years shown; growth was 1.7% in 2017 and 9.4% in 2021-2022 [1 p.51] [10]. Three things drove 2025: premium up 11%, investment income up 24% to BDT 5,708m, and claims down 5.6% to BDT 11,375m as maturities fell from BDT 7,853m to BDT 6,729m [1 p.251] [1 p.184]. The fund walk closes to within BDT 0.1m from the revenue account [10].

The fund now grows mostly from premium, not investment income: investment income was 0.56x the fund's annual addition in 2025 against 5.0x in 2017, when claims took most of the premium [10]. The outgo ratio, claims plus management expenses over net premium plus investment income, fell from 85% in 2016 to 61% in 2025 [10].

The investment mix has moved to government bonds. Treasury bonds (BGTB, incl. the BDT 15m statutory deposit) were BDT 37,612m at Dec-2025, 58% of invested assets, against BDT 14,483m and 33% in 2021; fixed deposits with banks and NBFIs fell to BDT 16,432m from a peak of BDT 22,205m in 2023 [1 p.264] [1 p.158]. By June 2026 BGTB on the same basis had reached BDT 41,714m and FDs BDT 15,256m [2 p.1]. BGTB are held to maturity at cost, so their value does not move with rates; listed shares, funds and bonds are marked to market [1 p.294].

The yield on the life fund, as the company reports it, was 9.18% in 2025 against 7.65% in 2023; management attributes the rise to higher interest rates [1 p.251] [1 p.158]. Our recomputation (investment income over the average fund) gives 8.77%, about 40bp lower, because the company's basis differs; the trend is the same [10]. Each 1pp of yield on the 2025 average fund was worth about BDT 651m of investment income [10]. Income tax charged to the fund rose to BDT 616m from BDT 270m, 10.8% of investment income [1 p.185] [10].

The equity book is small but loss-making: listed shares, mutual funds and listed bonds cost BDT 5,001m and had a market value of BDT 3,826m at Dec-2025, a BDT 1,175m unrealised loss held in the fair-value change account [1 p.186] [1 p.181]. That is 1.67% of the fund. The bond book includes BDT 300m of Beximco Green Sukuk valued at BDT 171m, and subordinated bonds of Southeast Bank (BDT 200m) and Standard Bank (BDT 60m) [1 p.209]. By June 2026 the loss had narrowed to BDT 980m [2 p.7].

Claims: 99% settled in 2025, but H1 2026 maturities rose 50%

Claims are mostly maturities and survival benefits, the scheduled payouts on savings policies, not deaths. Of BDT 11,375m of claims due in 2025, maturities were BDT 6,729m (59%), survival benefits BDT 3,931m, surrenders BDT 288m and deaths BDT 287m [1 p.286]. Claims fell to 48.6% of gross premium in 2025 from 84-87% in 2016-2017 [1 p.251] [5 p.125], because premium has grown faster than the policies maturing from the smaller sales of ten to fifteen years ago.

That ratio can turn. Maturity claims follow old sales, not this year's, and they jumped in H1 2026: BDT 5,185m against BDT 3,455m in H1 2025 (+50%), with survival benefits up 42% [2 p.2]. Total claims in the half were 85.7% of gross premium against 74.7% a year earlier, and the life fund grew only BDT 838m in H1 2026 (after paying the BDT 402m dividend) against BDT 2,019m in H1 2025 [2 p.2] [2 p.3] [10]. The company does not publish a maturity schedule, so the size of the wave in 2027-2028 cannot be measured from the filings.

Liquidity looks adequate for now. At Dec-2025 NLI held BDT 16,432m of FDs and BDT 4,810m in bank accounts, against 2025 claims payments of BDT 12,207m [1 p.182] [1 p.187]. Surrenders are small but rising, from BDT 114m (2021) to BDT 288m (2025) [1 p.286].

Settlement has improved sharply. The company's claim settlement ratio was 79.0% in 2021 and 99.4% in 2025 [1 p.296]. Unsettled claims fell from BDT 3,729m at the start of 2021 to BDT 120m at Dec-2025; maturity claims unpaid at year-end fell from BDT 1,374m to BDT 43m [1 p.286] [1 p.287]. For an industry where unpaid claims have been a public issue at weaker insurers, this is NLI's clearest operating difference.

Surplus and EPS: shareholders got 6.5% of a BDT 6.2bn surplus in 2025, hence EPS BDT 3.70

Because the fund belongs mainly to policyholders, NLI's earnings are not premium minus costs. They are the part of the actuarial surplus made available to shareholders. The actuary (Dr. Mohammad Sohrab Uddin for 2025) values the policy liabilities at 31 December; the excess of the fund over those liabilities is the surplus, BDT 6,195.4m in 2025 [1 p.295]. Of that, BDT 5,203.1m went to policyholder bonuses and BDT 590.4m was carried forward for future bonuses. The remainder, BDT 401.9m, is the 'surplus available to shareholders' that the company divides by 108.5m shares to report EPS of BDT 3.70 [1 p.222].

The split moves EPS more than the business does. Total surplus rose 5.0% in 2025, but the shareholders' slice fell 5.3% because the bonus allocation rose 8.5% [1 p.295] [10]. In 2022 the total surplus jumped to BDT 6,233m and BDT 1,614m was carried forward, yet the shareholders' slice was BDT 627m and EPS BDT 5.78 [4 p.262]; in 2023 surplus fell to BDT 4,279m, the carry-forward was almost nil (BDT 81m) and EPS was BDT 4.23 [3 p.309]. The shareholders' share of total surplus has ranged from 6.5% (2025) to 10.7% (2023) [10]. The filings do not explain how the shareholders' amount is set each year.

The board then proposes a dividend from that amount: 37% (BDT 3.70 a share, BDT 401.5m) for 2025, approved for the 41st AGM [1 p.221]. The dividend itself is paid out of the life fund in the following year: the 2025 revenue account shows BDT 379.8m, the 2024 dividend [1 p.185], and the H1 2026 account shows BDT 401.5m [2 p.3]. Note 115 says the company has not recognised a workers' profit participation fund (WPPF) expense and that, as a result, NPAT and EPS 'have been overstated'; it then cites Finance Ministry and Bangladesh Bank letters exempting banks and financial institutions from WPPF and states that an insurance company is a financial institution [1 p.222].

NAV per share (BDT 56.26 at Dec-2025, standalone) is total assets less outside and policyholder liabilities [1 p.222]. It is small next to the fund: BDT 6.1bn of net assets against a BDT 70.2bn fund. It has also moved irregularly, from BDT 64.44 (2022) to 47.29 (2023) [1 p.279], so P/NAV history is noisy.

What drives returns to shareholders is therefore narrower than the business. Earnings quality is high in the cash sense: the fund's operating cash flow was BDT 9,844m in 2025, 24x the shareholders' surplus, and there is no debt [1 p.187] [1 p.279]. But the shareholders' amount is an actuarial and board decision each year, not a residual profit, and almost all of it is paid out. Capital allocation for shareholders is in practice the dividend: no bonus shares since 2017, no rights issues, and the share count unchanged at 108.5m since 2018 [1 p.199]. A shareholder's return comes from the cash dividend and from any change in the price the market puts on that dividend stream; growth in the fund helps only if the actuary's surplus, and the slice released to shareholders, grow with it. Over 2021-2025 the fund grew 60% and the shareholders' surplus fell 3.5%, from BDT 416m to BDT 402m [10].

Ratios and peers: the largest and lowest-cost of three listed lifers, with the only strong cash flow

On the IDRA indicators, NLI is the largest and lowest-cost of the three listed life insurers compared here, using each company's own 2025 Key Financial Indicators page [1 p.251] [6 p.17] [7 p.126]. Its gross premium (BDT 23,407m) is 2.3x Delta Life's and 3.5x Pragati Life's. Its expense ratio, 26.6%, is lower than Delta's 28.1% and Pragati's 30.8%, and it has the widest margin under the IDRA limit (12.0% against 2.9% and 2.2%).

Persistency is mixed. NLI's conservation ratio (81.76%) is the highest of the three, 4.6pp above Delta (77.14%) and 3.1pp above Pragati (78.67%). But Delta reports a much lower second-year lapse ratio by number, 28.86% against NLI's 39.93%, while Pragati's is 47.88% [6 p.17] [7 p.126]. The lapse formulas are IDRA-prescribed, but the product mixes differ, so the gap needs care in reading. NLI's yield on the fund, 9.18%, is 0.27pp below Delta's 9.45% and 1.00pp above Pragati's 8.18%.

The clearest difference is cash. NLI generated BDT 9,844m of operating cash in 2025; Delta's operating cash flow was negative for the fifth year running (BDT -2,417m) and its life fund grew 5.0% against NLI's 17.0% [6 p.18] [1 p.252]. On the market, NLI's capitalisation is 0.14x its life fund, against 0.21x for Delta and 0.54x for Pragati [9] [10]. These are facts about the prices, not a view on them; the fund mostly belongs to policyholders in each case.

Governance: sponsors raised their stake to 58.5%; NBFI deposits with related parties total BDT 851m

Sponsors and directors held 58.47% of the shares at Dec-2025, up from 55.28% a year earlier; financial institutions held 18.29% and the general public 22.61%, down from 29.00% [1 p.146] [1 p.199]. The filings do not name which sponsor bought the extra 3.46m shares. Paid-up capital has been BDT 1,085m since 2018; it was built almost entirely from bonus shares (105.5m of the 108.5m shares), the last in 2017 [1 p.199]. Since 2018 all dividends have been in cash [5 p.16] [1 p.51].

The board is chaired by Tofazzal Hossain; Md. Kazim Uddin is chief executive and Probir Chandra Das, FCA, chief financial officer [1 p.182]. The auditor changed for 2025: Ahmed Zaker & Co. gave an unqualified opinion, with key audit matters on premium income, treasury-bond investments and the valuation of the life fund; Mahfel Huq & Co. audited 2024, also unqualified [1 p.164] [1 p.165]. Key management compensation was BDT 13.9m in both years [1 p.222].

Related parties are financial. NLI controls NLI Securities Ltd., a brokerage and DSE member (minority shareholders hold BDT 9.5m of its capital), and has lent it BDT 500m interest-bearing [2 p.6] [1 p.221]. It holds term deposits with two sponsors, IIDFC (BDT 433m) and National Housing Finance (BDT 30m), and with a shareholder, Uttara Finance (BDT 388m); it owns shares in sponsors IIDFC (BDT 59m), Central Depository Bangladesh (BDT 5.7m) and Venture Investments Partner (BDT 18m); and it paid BDT 8.3m for advertising to Bengal Media Corporation (Rtv), which shares a director [1 p.221]. The deposits with the three NBFIs total BDT 851m, 5.2% of all FDs [10].

Dividends have been steady in cash: 32% for 2020, 35% for 2021, 38% for 2022 and 2023, 35% for 2024 and 37% for 2025 [5 p.16] [1 p.51]. The 2022 dividend was reported at the time by The Business Standard from the company's disclosure, with EPS of BDT 5.78 [8]. Before 2018 the company paid mixed cash and stock dividends (20% cash plus 15% stock in 2016 and 2017) [5 p.16].

What's next: Q3 maturities, the FY2026 surplus split in May 2027, and the expense headroom

There is no forecast in this note. These are the dated events that will show which way the lines are moving, each tied to its source.

Direction, from history only: higher maturity claims in H1 2026 reduce the fund's addition and, other things equal, the surplus; higher treasury-bond yields since 2023 raised investment income by BDT 1,987m between 2023 and 2025 [1 p.251], and a fall in rates would reverse that over time as bonds and FDs roll. The expense headroom under the IDRA limit has narrowed from 22% to 12% in four years [1 p.251].

Risks: maturities, lapses and the surplus split matter most to shareholders

Each risk is tied to the line it moves and to the evidence in the filings.

Key questions: maturities, the surplus split and persistency decide shareholder returns

At BDT 90.1, NATLIFEINS trades at 24.4x FY2025 EPS, 1.60x Dec-2025 NAV, a 4.1% cash yield and 0.14x its June 2026 life fund [9] [10]. At year-end prices the P/E was 57.5x in 2021 and 25.2x in 2025, and P/NAV 4.5x and 1.7x [10]. These are facts about the price, not a view on it.

FAQ

How does National Life Insurance earn its EPS?

EPS is the actuarial surplus made available to shareholders, BDT 401.9m in 2025, divided by 108.5m shares: BDT 3.70 [1 p.222].

How big is National Life's life fund?

BDT 70,183m at Dec-2025 and BDT 71,021m at Jun-2026 [1 p.252] [2 p.1].

Is National Life within the IDRA expense limit?

Yes: BDT 6,229m actual against BDT 7,076m allowable in 2025, 12.0% under [1 p.251].

What dividend did National Life pay for 2025?

37% in cash, BDT 3.70 a share or BDT 401.5m [1 p.221].

Who owns National Life Insurance?

Sponsors and directors 58.47%, financial institutions 18.29%, general public 22.61% at Dec-2025 [1 p.146].

Which results does this note use?

Annual reports for 2016-2025 (KFI pages) and the unaudited H1 2026 consolidated statements. Q3 2026 statements are not yet in our corpus.

Sources

1. National Life Insurance PLC Annual Report 2025 (year to 31-Dec-2025) · link · accessed 2026-10-31
2. National Life Insurance PLC unaudited consolidated financial statements, six months to 30-Jun-2026 · link · accessed 2026-10-31
3. National Life Insurance PLC Annual Report 2023 · link · accessed 2026-10-31
4. National Life Insurance Company Limited Annual Report 2022 · link · accessed 2026-10-31
5. National Life Insurance Company Limited Annual Report 2020 (Key Financial Indicators 2016-2020) · link · accessed 2026-10-31
6. Delta Life Insurance Company Limited Annual Report 2025 (Key Financial Indicators) · link · accessed 2026-10-31
7. Pragati Life Insurance PLC Annual Report 2025 (Key Financial Indicators) · link · accessed 2026-10-31
8. The Business Standard, 'National Life to pay 38% cash dividends' (9-May-2023), reporting the company's FY2022 disclosure · link · accessed 2026-10-31
9. AnalystBro price data (TradingView feed): DSE:NATLIFEINS, DSE:DELTALIFE, DSE:PRAGATILIF daily bars to 29-Oct-2026 · link · accessed 2026-10-31
10. AnalystBro model for this report (workbook tabs below) · link · accessed 2026-10-31