CRNL has assigned grading of ‘CARE-NP IPO Grade 4’ to the proposed Rights Share Issue of Surya Life Insurance Company Limited (SLICL). SLICL proposes 70% rights share issue of 8.8741 Million equity shares of face value of Rs.100 each at par aggregating Rs.887.41 Million.
The grading assigned to SLICL is constrained by its relatively small market share in the life insurance industry, inadequate solvency margin due to increase in new minimum capital requirements, concentration of premium mix primarily focused on endowment policies, high claims paid through Foreign Employment policies and surrender of policies. The grading is also constrained by competition from other insurance companies.
The grading, however, derives strength from highly experienced board and management team, diversified and adequate geographical coverage through branches and agents, significant growth in Premium Income and Net Underwriting Profit over the period ended FY18 (refers to 12 months’ period ended mid-July 2018) and 9MFY19 (refers to 9 months’ period ended mid-April 2019) and good asset quality of investment book. The grading further takes into account healthy premium growth, comfortable Combined Ratio, increasing investment income, consistent growth of policyholder/ life insurance fund, return on shareholder funds and moderate lapse ratio.
Source: Care Ratings Nepal