Kathamandu: Credit rating agency, ICRA Nepal has upgraded the issuer rating of Shikhar Insurance Company Limited (SICL) from [ICRANP-IR] A (pronounced ICRA NP Issuer Rating A) to [ICRANP-IR] A+ (pronounced ICRA NP Issuer Rating A plus).
According to ICRANP issuers with such ratings are considered to have an adequate degree of safety regarding the timely servicing of financial obligations. Such issuers carry low credit risk. The sign of + (plus) or – (minus) appended to the rating symbols indicates their relative position within the rating categories concerned.
Long track record, strong market position and seasoned management team, strong reinsurance arrangements, strong solvency, improved liquidity, and adequate profitability profile has been mentioned as the key strength of the company.
ICRA Nepal has mentioned that the declining retention ratio, high claims, and management expense ratio could affect long-term underwriting profitability. Further, the fragmented industry and intense competition, changes in the operating environment because of new regulations too may pose threat to the company in the future.
Shikhar Insurance has a 13 percent market share in the gross written premium of general insurers. It has been leading the general insurance industry for the last five years.
The paid-up capital and the net worth of Shikhar Insurance as of mid-July 2022 are ~NPR 2,286 million and NPR 4,679 million, respectively. SICL has a 60:40 promoter–public shareholding ratio. The major shareholders as of mid-July 2021 include Mr. Gaurav Agarwal (11.1%), Buddha Air Pvt. Ltd. (8.03%), Mr. Bikas J.B. Rana (6.89%), Mrs. Chanda Sherpa (7.17%), Mr. Shashikant Agrawal (4.44%) and Mr. Kailash Prasad Sirohiya (3.79%), among others. SICL reported a PAT of NPR ~401 million in FY2022 (NPR 311 million in FY2021) over an asset base of NPR 6,557 million as of mid-July 2022 (NPR 5,396 million in mid-July 2021).