General Insurance Company graded with CARE-NP BB+ (Is)[Double B Plus (Issuer)] rating by Care Ratings Nepal

Wed, May 20, 2020 12:59 PM on Credit Rating, Latest,
General In...

CRNL has assigned „CARE-NP BB+  (Is)‟ rating to General  Insurance  Company  Nepal  Limited  (GIC). Issuers  with  this  rating  are  considered  to have moderate  risk  of  default  regarding  timely  servicing  of financial obligations, in Nepal. 

The rating assigned  to GIC is  constrained  by short track record of its  operation, competition from other insurance  companies  coupled  with  relatively  small  market  share  in  the non-life  insurance  industry and moderate financial risk profile with high expense ratio leading to high combined ratio. Further, the rating is constrained by lower reported solvency ratio vis-à-vis the regulatory requirement and concentration in motor segment. The rating, however, derives strength from GIC‟s association with strong promoter group, experienced board &management team and  diversified investment book with fair return on investment. Ability  of  GIC  to  maintain  growth  in  income  while  maintaining  quality  of  the  portfolio  and  ability  to maintain minimum regulatory solvency ratio will be key rating sensitivities.

Key Rating Weaknesses

  • Short  track  record  and  competition  from  other  insurance  companies  coupled  with  relatively  small market share in the non-life insurance industry 
  • Moderate financial risk profile with high expense ratio leading to high combined ratio
  • Concentration in motor segment 
  • Reported solvency ratio remains lower than the regulatory requirements

Key Rating Strengths

  • Strong promoter group
  • Experienced board and management team
  • Diversified investment book with fair return on investment

About the Company

General  Insurance Company  Nepal Limited  (GIC)  is  a  general  (non-life)  insurance  company.  The company has started its operation from June 20, 2018. The company has been offering a range of general insurance  covers  for  businesses  &  individuals  and  has  a  comprehensive  range  of  general  insurance products  for  Fire,  Marine,  Motor,  Engineering,  Miscellaneous  and  Agriculture  etc. GIC  is  promoted  by institutional  and  individual  promoters  from  different  background.  The  promoter  group  shares  of  the company are mostly held by Mrs. Babita Kumari Agrawal with 9.07% of total shares followed by Mega Bank Nepal Limited, “A” class financial institution (7.14%) and Deva Bikas Bank Limited, “B” class financial institution (7.14%). GIC has network of 39 branches (including head office) supported by 178 employees and 171 insurance agents as on Mid-January 2020. GIC has assets base of Rs.963 Mn as on July 16, 2019 which witnessed 31.52%  growth  over  FY18. The  capital  structure  of  the  company  comprises  of  Rs. 700Mn  as  paid  up capital from the promoter group and the Rs. 300 Mn is proposed to be issued to the public through IPO.

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