Thu, Oct 11, 2018 6:42 AM
Care Rating Nepal Ltd has assigned grading of ‘CARE-NP IPO Grade 3 [IPO Grade Three]’ to the proposed Rights Share Issue of Asian Life Insurance Company Limited (ALIC). ‘CARE-NP IPO Grade 3’ indicates Average Fundamentals.
CRNL assigns IPO grades on a scale of Grade 1 to Grade 5, with Grade 1 indicating strong fundamentals and Grade 5 indicating poor fundamentals. CRNL’s
IPO grading is an opinion on the fundamentals of the issuer. The grade assigned to any individual issue represents a relative assessment of the ‘fundamentals’ of the issuer.
ALIC proposes 60% rights share issue of 7.54035273 million equity shares of face value of Rs.100 each at par aggregating Rs. 754.035273 million.
The grading assigned to the rights share issue of ALICL derives strength from moderate track record with experienced board and management team, diversified and adequate geographical coverage through branches, significant growth in gross premium written, consistent growth in net underwriting profit & healthy combined ratio over the period. The grading further takes into account ALIC’s moderate profitability, low net lapse ratio, moderate assets quality of investment book and increasing investment income, adequate solvency ratio, consistent growth and adequate policyholder/ life insurance fund.
The grading, however, is constrained by high portion of claim paid through surrender of policies, concentration in endowment policies, competition from other insurance companies and relatively small market share in the life insurance industry.
Continued promoter support, ability to remain profitable while achieving business growth and maintain adequate solvency position would be the key grading sensitivities.