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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