Kathmandu: The Nepal Re-insurance Company Limited ( Nepal Re) , which is preparing to issue rights shares, has received a credit rating from ICRA Nepal. According to a press release issued by credit rating agency ICRA Nepal, the Nepal Re been assigned ‘ICRA-NP IR Double AA-‘ issuer rating.
Such a rating indicates a high degree of safety in the timely servicing of financial obligations. Such issuers carry very low credit risk.
The government owns 44 percent of the company in Nepal Re with a paid-up capital of Rs.10 billion. Similarly, 17 general insurance companies have 27 percent while 8 life insurance companies have 6 percent equity investment.
The company has strong solvency of 2.5 times in the last fiscal year. Domestic insurers are required to do 20 percent of the total reinsurance business with the company in Nepal Re, so this is a strong point for the company in terms of business growth and profitability.
“The average return on investment for the last three years has been around 8 percent and the average return on assets has been around 7 percent.”
As 71 percent of the total insurance business is concentrated on domestic insurers, this is a major challenge for Nepal Re, said ICRA Nepal.
Similarly, 19 percent of the total premium income has been received from foreign insurers and re-insurers.