Prabhu Insurance Reaffirmed with Triple B Plus Rating

Kathmandu — Prabhu Insurance Limited has once again secured a “Triple B Plus (Issuer)” credit rating from Infomerics Credit Rating Nepal Limited, reaffirming the company’s financial strength and operational stability.

The company, which was founded in 1995, has maintained a steady presence in Nepal’s non-life insurance sector. Backed by robust institutional investors — including the government-owned Employees Provident Fund and Class ‘A’ commercial bank Prabhu Bank Limited — the company’s promoter group is considered financially sound and strategically strong.

In recent years, Prabhu Insurance has emphasized investment diversification. From FY 2077/78 to 2080/81, the company’s investment portfolio expanded at an annual growth rate of approximately 19%. Although the company briefly shifted toward short-term deposits after the maturity of term deposits and receipt of reinsurance commissions in FY 2080/81, it has resumed diversified investment strategies in the current fiscal year.

The company’s capital structure remains solid, as evidenced by its solvency ratio of 4.67 times as of FY 2080/81 — significantly higher than the 1.30 times minimum mandated by the regulator. Additionally, the company’s claims management remains efficient, with the claim ratio dropping from 38% in FY 2080/81 to 34% in the third quarter of FY 2081/82.

Prabhu Insurance’s profitability continues to rise. Its underwriting profit reached Rs. 1.79 billion by the third quarter of the current fiscal year, up from Rs. 1.11 bllion in the previous year. The combined ratio also improved notably, falling from 81% to 63% during the same period, indicating enhanced operational efficiency and cost control.

The company’s prudent risk selection practices — even amid natural disasters and adverse conditions — have helped maintain equilibrium between operational expenses and claims liabilities. While the company faces external challenges, including regulatory shifts and heightened competition in the insurance sector, it has demonstrated responsible governance and adaptability.

Over the past year, Prabhu Insurance posted growth rates of 9% in insurance premiums and 0.44% in overall insurance income. Although slightly below the national industry average of 14%, this performance is viewed as sustainable given the company’s cautious and balanced approach.

Currently, the insurer offers 65 types of policies, with motor insurance accounting for the largest share — 38% of the gross premium income. Thanks to a high retention rate in this segment, it also contributes over half of the net insurance income. Conversely, while aviation insurance represents 22% of gross premium income, its net contribution remains minimal due to a low retention rate of only 2%.