Kathmandu. Credit rating agency Ikea Nepal has reaffirmed the Double B Minus Issuer ( [ICRANP-IR] BB-) rating granted to small insurer Star Micro Insurance Company Limited.
Shares with such a rating are considered moderately risky for the issuing company to meet its predetermined financial obligations in a timely manner. According to ICRA, this rating is only an opinion of the general creditworthiness of the assessed institution and not an assessment of any particular loan instrument. The + (plus) or – (minus) associated with the rating symbol indicates the relative position within the respective rating category.
This rating rating takes into account the company’s substantial capitalization profile and solvency ratio (for current business standards), which is expected to improve further post the proposed initial public offering. The company has proposed to issue primary shares worth Rs 22.50 crore.
ICRA Nepal considers its operational benchmark by considering adequate branch network (41 branches/sub-branches and extension counters) and growing business volume (8.3 times growth in total premium income).
The rating also includes a senior management team experienced in the insurance industry and internal investment earnings, which are supporting its overall profitability despite underwriting losses.
