Asian Life Insurance receives ICRA Grade 4+ for upcoming 50% right issue

ICRA Nepal has assigned an “[ICRANP] IPO Grade 4+”, indicating below average fundamentals to the proposed rights issue amounting Rs 40.27 crore to Asian Life Insurance Company Limited (ALICL). The process to issue 50% right share of ALICL is on review in Securities Board of Nepal (SEBON) pipeline. The life insurance company is proposing to issue 4,027,966.2 shares in the ratio 2:1 (50%) at the face value of Rs 100 each to be issued to the existing shareholders at par. As per ICRA Nepal, the grading is constrained by slim solvency margin of the company. Solvency profile of ALICL deteriorated after FY 2013 due to factors like de-growth in fresh premium earnings (in FY 2012 and FY 2013) and declining yield on investments that lowered new business surplus. Solvency margin improved marginally in FY 2016 due to recent improvement in new business premium which remains a positive. The grading considers ALICL’s relatively moderate operating track record, moderate market positioning as reflected in ~6% share in industry gross premium written (GPW) over past 2-3 years and adequate franchise network of the company (23 branches and 72 sub-branches) across the country. NIBL Capital Markets Limited has been assigned as the issue manager for the right issue. ALICL had earned Rs 1.58 crore in the first quarter of the fiscal year 2074/75. Its paid up capital remains at Rs 80.55 crore. After the issuance of 50% right share, its paid up capital will reach Rs 1.20 arba.