Kathmandu. The rating of the government-owned reinsurance company Nepal Reinsurance Company is likely to be one of the best and most investable reinsurance companies in South Asia. The work of rating Nepal Reinsurance by global rating agency AM Best has reached the final stage.
According to related sources, AM Best is likely to make Nepal Reinsurance’s rating public on March 1. Nepal Reinsurance has been rated by an internationally recognized organization after a decade of operation.
The rating of Nepal Reinsurance had also been delayed for a long time due to the failure to obtain a sovereign rating for Nepal. Since Nepal Reinsurance, which also has investments from private life and non-life insurers, is essentially a government-owned company, its rating is also affected by Nepal’s sovereign rating.
In Nepal’s sovereign rating released by global rating agency Fitch Ratings last month, Nepal was identified as the second-most debt-worthy country in South Asia after India. Fitch Ratings had given Nepal a double B minus (BB minus) rating on its sovereign credit rating.
Am Best has given Indian reinsurer GIC Reliance an ‘A minus’ rating for financial strength. An ‘A’ rating indicates a stronger financial position than ‘A minus’.
Nepal, which has been rated for the first time by international rating agency Fitch Ratings, has received an above-average rating. The rating Nepal has received is the highest in South Asia after India. Except for India, the ratings of other countries are lower than Nepal. According to Fitch Ratings, all other countries in South Asia except Bhutan have been rated.
Nepal Reinsurance’s profitability is supported by a strong return on investment and a healthy solvency margin ratio. In addition, its investment diversification is within regulatory limits and it has maintained adequate liquidity. Since the Government of Nepal owns more than 40 percent of the shares in this company, its financial strength is considered relatively good.
Nepal Reinsurance’s paid-up capital is Rs 13.42 billion. As per the instructions given by the Nepal Insurance Authority, shareholders have to invest another Rs 6.58 billion for paid-up capital to maintain the paid-up capital.
