Kathmandu. Nepal Insurance Company Limited’s underwriting surplus has fallen drastically due to payment of insurance claims for the damage caused by last year’s floods and landslides.
According to rating agency Infomerics Nepal, the claim ratio has reached 68 percent by the third quarter of the current fiscal year (mid-April). Last fiscal year 2080. The claim ratio was only 52 percent in 81.
The claim ratio is determined based on the ratio between the total collected insurance fee and the total claim payment. The claim ratio also starts to increase as the amount to be paid by the loss of the insured property is increased compared to the insurance fee collected for insurance.
The claim ratio has increased due to damage to insured property due to floods in the month of Bhadai last year. As the claim ratio increased, the combined ratio has also increased from 92 percent to 94 percent.
Due to the declining bank interest rate, the average investment return of the insurance company has been limited from 8.02 percent to 6.44 percent.
Its solvency ratio was 4.34 times based on the insurance valuation of the last fiscal year compared to the regulatory minimum solvency ratio of 1.5 times. The solvency ratio indicates how much wealth the insurer has as much assets as compared to financial liability. 2079. This ratio is only 2.08 times in 80, but increase in paid-up capital through bonus and right shares, increase in valuation of fixed assets including real estate has increased the assets.
Also, the retention ratio of the insurance company was 40 percent in the last fiscal year. This ratio has reached 46 percent by mid-April of the current fiscal year. The average retention ratio of non-life insurers is only 38 percent.
Based on the re-evaluation of the insurance company’s financial position, claim payment, combined ratio, asset quality and other indicators, Infomerics Nepal has again endorsed the IRN A-(Is)A minus issuer rating provided for the purpose of issuance of right shares.
Nepal Insurance is the oldest insurance company in nepal’s insurance market. Despite being an old insurer, its market share is limited to just 4 percent.
Current fiscal year 2081. The insurance company has collected a total insurance premium of Rs 1.28 billion till mid-April 2018. This is an increase of 30 percent compared to the same period last year. Last fiscal year 2080. The total insurance revenue growth was only 0.3 percent in 1981.
Nepal Bank Limited (13.08%), Asian Life Insurance (13.02%) and United Distributors Nepal (6.06%) under Vishal Group are the main shareholders of the company.
