Proposed IPO issue of IME Life Insurance receives below average fundamentals from Care Ratings; issue worth Rs.60 Crore graded

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

The grading assigned to ILIC 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 ILIC’s adequate geographical coverage through branches and good asset quality of investment book.

IME Life Insurance Company Limited (ILIC) is a life insurance company registered at Office of Company Registrar under the Company Act 2006 on October 1, 2008 and has obtained license from Insurance Board on July 4, 2017. ILIC has been offering an extensive range of products as Money Back, Endowment, Whole Life, Term Assurance products etc. through its diversified sales network. ILIC is part of IME Group which has business across different sectors including banking, remittance, insurance, hydropower, hospitality etc.

ILIC has branch network of 86 branches, 26 sub-branches and 8,550 insurance agents as of Mid-Jan 2020. ILIC had an asset base of Rs. 2562 Million as on July 16, 2019. The capital structure of the company comprises of Rs. 1400 Million as paid up capital from the promoter group and the Rs. 600 Million is proposed to be issued to the public through IPO.

Source: Care Ratings Nepal