Trust Micro Insurance Assigned ‘Double B Minus’ Issuer Rating by Infomerics Nepal

Kathmandu — Trust Micro Insurance Limited has been assigned an issuer rating of ‘IRN BB- (IS)’ by Infomerics Credit Rating Nepal Limited, indicating a medium risk in meeting its financial obligations on time. The rating reflects the company’s current operational status, economic indicators, management structure, and the regulatory environment in which it operates.

Having commenced operations in March 2024, Trust Micro Insurance is a relatively new entrant in Nepal’s non-life micro insurance sector. Despite its limited operational history, the company has expanded its presence to 33 branches and sub-branches and currently offers 13 insurance products. However, its business portfolio remains heavily concentrated, with the motor segment contributing approximately 93% of the gross premium and 97% of the net premium in 2024.

Infomerics noted that the company’s reinsurance arrangements provide some risk protection against large claims. Moreover, the firm’s investment portfolio is gradually expanding, and investment returns have been reported as satisfactory.

Nevertheless, several challenges persist. The company faces high administrative expenses relative to its premium income, weak profitability with a return on assets of only around 1%, and limited product diversification. Additionally, the regulatory cap on micro insurance coverage—set at a maximum of Rs 5 million by the Nepal Insurance Authority—is expected to constrain the company’s future growth.

The competitive landscape is another key concern. Currently, four dedicated micro non-life insurance companies operate in Nepal, alongside 14 larger insurance firms that also offer micro insurance services to low-income customers. This crowded and competitive environment presents obstacles for new entrants seeking to establish market share.

Infomerics has emphasized that the company’s ability to navigate regulatory limitations, improve underwriting practices, manage operating costs, and diversify both its insurance and investment portfolios will be critical factors influencing future rating actions.

As of mid-July 2024, Trust Micro Insurance’s paid-up capital stood at Rs 525 million—below the regulatory requirement of Rs 750 million. To meet this requirement, the company is preparing to issue public shares. Major shareholders of the company include Sifari Investment Pvt Ltd and Wipro Fincorp Pvt Ltd, each holding a 21.43% stake as of mid-April 2025.