CARE Nepal reaffirms Grade 4 rating of right share issue of United Insurance Company; Ratings indicate below average fundamentals
Tue, Apr 2, 2019 2:51 PM on Credit Rating, Dividend, Bonus & Rights, Latest, Stock Market,
CRNL has reaffirmed grading of ‘CARE-NP IPO Grade 4 [IPO Grade Four]’ to the proposed Rights Share Issue of United Insurance Company (Nepal) Limited (UIC). ‘CARE-NP IPO Grade 4’ indicates Below Average Fundamentals. UIC proposes 240% rights share issue of 7.2576 million (Mn) equity shares of face value of Rs.100 each at par aggregating Rs.725.76 Mn.
Detailed Rationale & Key Grading Drivers
The grading assigned to the rights share issue of UIC is constrained by substantial decline in gross premium written, net underwriting profit and PAT during FY18 (refers to 12 month period ended mid-July 2018) and H1FY19 (refers to 6 month period ended mid-January 2019) impacting combined ratio. Further, the grading is constrained by UIC’s concentration in motor segment, albeit some diluting over the period, competition from other insurance companies and relatively small market share in the non-life insurance industry in Nepal. The grading, however, derives strength from long track record and strong promoter group, experienced board and management team, improved investment income, good asset quality of investment book and healthy solvency ratio. The grading also factors in the Supreme Court order which held the action taken by Insurance Board of Nepal to halt fire business and negative reserve and surplus recovered substantially over the period.
About the Company
United Insurance Co. (Nepal) Limited (UIC) is a General (Non-life) insurance company. The company has started its operation from December 1, 1993. The company is promoted by leading industrialists and reputed trading and commercial houses of Nepal. The company has been offering a range of general insurance covers for businesses & individuals and has a comprehensive range of general insurance products for Fire, Marine, Motor, Engineering, Agriculture and Aviation etc. UIC has branch network of 30 (including head office) and 137 insurance agents as on Mid-January 2019. UIC has assets base of Rs. 1,270 Mn as on July 16, 2018.
(CARE Ratings Nepal)
