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1.1 Background of the study

Financial performance refers to the measuring the results of a firm's policies and operations in
monetary terms. These results are reflected in the firm's return on investment, return on assets,
value added, etc. A company's financial statement is used to show a company's performance over
a certain period of time, generally every fiscal quarter. The financial statement really consists of
three different statements: balance sheets, cash flow statements and income statements. The
level of performance of a business over a specified period of time, expressed in terms of overall
profits and losses during that time. Evaluating the financial performance of a
business allows decision-makers to judge the results of business strategies and activities in
objective monetary terms.

A general term insurance is related to service sector. It is concerned with the protection of
economic value of assets. Insurance is “a contract for reducing losses from accident incurred by
an individual party through a distribution of the risk of such losses among a number of parties”.
The definition goes on to say: “In return for a specified consideration, the insurer undertakes to
pay the insured or his beneficiary some specified amount in the event that the insured suffers loss
by pooling both the financial contributions and the ‘insurable risks’ of a large number of
policyholders. The insured is typically able to absorb losses incurred over any given period much
more easily than would the uninsured individual. The amount of money to be charged for a
certain amount of insurance coverage is called the premium. Risk management, the practice of
appraising and controlling risk, has evolved as a discrete field of study and practice. The
transaction involves the insured assuming a guaranteed and known relatively small loss in the
form of payment to the insurer in exchange for the insurer's promise to compensate (indemnify)
the insured in the case of a financial (personal) loss. The insured receives a contract, called the
insurance policy, which details the conditions and circumstances under which the insured will be
financially compensated.

Insurance is the pooling of fortuitous losses by transfer of such risks to insurers, who agree to
indemnify insured for such losses, to provide other pecuniary benefits on their occurrence. The
insurance policy is a contract between the insurer and the insured, known as the policyholder,
which determines that claims which the insurer is legally required to pay, in exchange for
payment, known as the premium.
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1.2Profile of the organization

Prime Life Insurance:
Prime Life was established in June 2007 by eminent business group with a mission to reach out
to people and make a difference to their lives through superior life insurance products and
helping them to look up to a better tomorrow. In short span of time, Prime Life has successfully
carved a niche for itself in the insurance sector and in line with the vision Prime Life.

Prime Life Insurance Company Limited provides life insurance products in Nepal. It offers
pension plan, mortgage redemption insurance, life insurance, endowment policy, money back
policy, whole life endowment, and foreign employment policy products. The company
distributes its products branches and sales offices. Prime Life's Mission is to reach out to people
and make a difference to their lives through superior life insurance products and helping them to
look up to a better tomorrow. The head office of Prime Life Insurance is located in Hattisar,
Kathmandu. Prime Life Insurance company was initiated by Khetan Group and was incorporated
as Public Limited Company in June 2007. The shareholding constitutes of the promoters holding
70 percent and 30 percent is to be offered to general public. The promoters represent Nepal’s
leading and highly prominent business groups having widely diversified business interests and
expertise. Laxmi Bank Limited, one of the leading commercial banks in Nepal, is one of the
major promoters with 15 percent stake. We plan to offer the equity shares to general public
within one year of commencement of our business.

1.3 Objective of the study

The liquidity mobilization practice of one Insurance may or not be efficient in comparison to
Insurance. So regarding the Prime Life Insurance is being tested according to the soundness of its
financial position. The analysis and finding may not be significant and accurate due to secondary
data and their chances of manipulation by publisher. This report has been prepared as per the
requirement of academic purpose. Beside academic purpose this report has following main
objectives;
i. To examine the total financial source and their utilization of life and non-life insurance
transaction in business
ii. To examine the revenue through insurance business
iii. To know the financial position of the business.
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1.4 Rational of the study

 This study will give the information about the financial status of Prime Life Insurance
Company.
 It will definitely help to increase the analytical power of the stakeholders such as
insured, insurer, shareholders, etc.
 This study will be beneficial for the entire person who is directly/indirectly related to
insurance policies.
 It will also focus for the interest for academician, students, teachers or any other
stakeholders who are practicing in the time of insurance policies.

1.5 Review
A literature review is an intensive and systematic process of study and evaluation of related
knowledge to the relation with research topic. It provides clear understanding about different
aspects of purpose of study. The literature review is an integral part of the entire research process
and makes a valuable contribution to almost every operational step. Review of literature means
reviewing research studies or other relevant propositions in the related area of the study so that
all the past studies their conclusions and deficiencies may be known and further research can be
conducted.
1.6 Methodology
Research methodology is a way to systematically solve the research problem. It may be
understood as a science of studying how research is done scientifically. In it we study the various
steps that are generally adopted by researcher in studying his research problem along with the
logic behind them. The various objectives of this chapter are to show the financial relations from
which liquidity, structure of working capital and utilization of working capital of the factory can
be measured.

The study about selected listed manufacturing companies in Nepal has been already streamlined
to some extent in earlier chapter regarding their growth, objective, statement of problem, relevant
literature of concerning manufacture in companies have been reviewed in second chapter. This
chapter, the focus has been made on research design, nature of data, population and sample,
source of data, data collection techniques and tools used for data analysis.
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1.7 Limitation of the study

The deep comprehensive analysis and study couldn’t be done due to time constraints as this
study focused on the analysis of performance of insurance business in the context of Nepal.
 The study covered all 137 branch of Prime Life Insurance company.
 The data to be used in this study are collected from journals, previous research reports
and published unofficial report of Economic Survey by Ministry of Finance Government
of Nepal.
 There was difficulty in analyzing the information obtained from different secondary
sources due to qualitative nature of information.
1.8 Organization of the study

Research report can be prepared in different ways. Researcher writes the styles of
arrangement of chapters in the thesis. This report is written following ways:
a. Introduction b. Results and Analysis c. Summary and Conclusion
First unit of the research report the background of the topic Is written. Introduction
creates interest over research issue or subject. This unit consists of background of the
study, purpose of the study, objectives of the study, significance of the study, limitations of the
study, organization of the study
Second unit is used to present data in a systematic and understandable way like table,
chart, figure, diagram, etc. Such presented data are analyzed and interpreted using various
statistical, financial and mathematical tools.
Third unit of the research consist summary and conclusion. This part of the research
report shows the data findings in a briefly, logical and rational way to the problem area research
objectives and research questions within the framework presented in unit 1. In concluding
section, researcher should briefly summarize his major findings.