Kathmandu. Shikhar Insurance Company Limited has been ranked as the second insurer in the insurance sector to receive a double A minus issuer rating.
It is the first of the life and non-life insurers to receive a Double A+ rating and the second among the indigenous insurers with a reinsurer. Earlier, only the state-owned Nepal Reinsurance Company had received such a rating.
According to rating agency ICRA Nepal, the insurance company’s financial strength has been upgraded from issuer rating A+ to double A minus after re-evaluation of its financial strength. There is a high guarantee that a company receiving such a rating will be able to meet all financial liabilities within the stipulated time frame. The chances of the company not repaying the debt or liability taken by the company are low.
According to a press release issued by ICRA Nepal, the company’s rating has improved due to the increasing business size of the insurance company, improvement in claim ratio, risk savings and improvement in overall profit rate.
Despite pressure on market competition due to the merger between non-life insurers, the continued lead and the highest share (12 to 13 percent) of the total insurance revenue has also kept the company comfortable.
Chief Executive Officer Deep Prakash Pandey, who has been leading the company continuously for more than two decades, and experienced associates, a wide branch network, strong risk management policy, strong reinsurance and disaster management will also help the company improve its future progress and solvency ratio.
Due to its limited net-holding policy to avoid risk, it has made more profits than other competitors. As a strong factor, ICRA Nepal has stated that the period of claim settlement is better than the market average. and
Insurance selection:
Due to the merger, there will be a challenge to increase market share by competing with other insurers who have emerged as big competitors in terms of capital and branch network. The non-life insurance business has also been affected due to the slowdown in the economy.
Its interest income is also at risk of being affected due to unstable interest rates. It has kept most of the money in the form of short-term fixed deposits in commercial banks. In the last two years, the return on its investment has shrunk due to deposits for a short period of time. ICRA Nepal has also pointed out the risk that any change in the regulatory provisions regarding motor insurance will have a negative impact on its overall business. A large part of shikhar insurance’s total insurance premium is covered by motor insurance.
Gradually, the company’s ability to continue its leading position, improve claim ratio and solvency ratio, and ensure adequate profitability will remain as the major rating sensitivity.
