Care Ratings assigns below average fundamentals to IPO issue of Sun Nepal Life Insurance; proposes IPO worth Rs.60 Crore

Care Ratin...

CRNL has assigned grading of ‘CARE-NP IPO Grade 4’ to the proposed Initial Public Offer (IPO) of Sun Nepal Life Insurance Company Limited (SNLIC). ‘CARE-NP IPO Grade 4’ indicates Below Average Fundamentals. SNLIC proposes to issue 6 Million shares of face value of Rs.100 each at par aggregating Rs.600 Million.

The grading assigned to SNLIC is constrained by short track record of its operation, competition from other insurance companies coupled with relatively small market share in the industry. Further the grading is constrained by lower solvency ratio vis-à-vis the regulatory requirement and concentration in endowment policies.

The grading, however, derives strength from strong promoter group, experienced board and management team and moderate financial risk profile with improving combined ratio. Further, grading is supported by SNLIC’s adequate geographical coverage through branches and good asset quality of investment book.

Sun Nepal Life Insurance Company Limited (SNLIC) is a life insurance company which obtained license from Insurance Board on August 2, 2017. SNLIC has been offering an extensive range of products as Money Back, Endowment, Whole Life, Term Assurance products etc. through its diversified sales network. SNLIC has branch network of 21 (including head office), 56 sub-branches and 15,838 insurance agents as of Mid-Dec 2019.

SNLIC had an asset base of Rs.2344 Million as on July 16, 2019. The capital structure of the company comprises of an authorized capital of Rs.2 Billion out of which Rs.1.40 Billion is paid up capital from the promoter group and the remaining is proposed to be issued to the public through IPO.

Source: Care Ratings Nepal