ICRA Nepal has assigned “[ICRANP] IPO Grade 3”, indicating average fundamentals to the proposed rights issue amounting to NPR 390 million of Lumbini General Insurance Company Limited (LGIL). ICRA Nepal assigns IPO1 grading on a scale of IPO Grade 1 through IPO Grade 5, with Grade 1 indicating strong fundamentals and Grade 5 indicating poor fundamentals. For the grading categories 2, 3 and 4, the sign of + (plus) appended to the grading symbols indicate their relative positioning within the grading categories concerned.
The grading factors in LGIL’s adequate track record, adequate franchise network, tested underwriting norms, adequate underwriting and overall profitability and experienced management team. LGIL has healthy premium retention ratio, backed by sizeable motor segment proportion, which has supported the underwriting performance so far. The grading also takes into consideration, LGIL’s adequate reinsurance arrangements, including catastrophic provisions, which helped LGIL maintain its claims paying ability, solvency position and profitability profile in the aftermath of the April 2015 earthquake.
Source ICRA NEPAL