Kathmandu: Himalayan Re-insurance Company Limited has received Financial Strength Rating of “B” (Fair) and a Long-Term Issuer Credit Rating of “bb+” (Fair) from global rating agency AM Best. The outlook assigned to these credit ratings is supposed to be financially ‘Stable’.
According to AM Best, the ratings reflect Himalayan Re’s balance sheet strength which is adequate for its operating performance, limited business profile and appropriate enterprise risk management (ERM).
AM Best views the company’s initial capitalization of Rs. 7 billion in paid-up capital to be supportive of the company’s planned growth over its five-year start-up phase. Himalayan Re is expected to issue public shares next year.
AM Best expects the company to maintain a low-risk investment portfolio, with concentration in term deposit and risk free securities assigned to fixed income. Himalayan Re lacks an established market position and is expected to face increasing competition as it grows its market share.
Himalayan Re is expected to benefit from the regulatory provision for 100 per cent mandatory cession with domestic re-insurers for the local insurance companies. The underwriting portfolio is expected to show concentration toward property and engineering risks.
Himalayan Re’s ERM framework as adequate, supported by a risk governance structure that has been put in place, and risk management policies and procedures, which are expected to be refined over time. Risk management capabilities are supported by an experienced management team that brings technical expertise and relevant industry experience.