ICRA Nepal Assigns IGI Prudential Insurance ‘A-’ Rating, Places It Under Watch Over Flood Claims

Kathmandu — ICRA Nepal has assigned an issuer rating of ‘A-’ to IGI Prudential Insurance and placed it under watch with developing implications, citing a sharp rise in claims from the August 2026 floods. The rating, published on October 1, indicates an adequate degree of safety in meeting financial obligations and a low level of credit risk.

According to ICRA Nepal, flood-related claims against the company reached NPR 835 million as of September 28, up from NPR 187 million on August 31. The agency said the uncertain scale of future claims is the main reason for the watch placement, though the company’s reinsurance arrangements, including extensive catastrophe cover for the risks it retains, are expected to absorb part of the losses.

ICRA Nepal cited the insurer’s long operating history, adequate capital base, established market presence, experienced board and management, and comfortable solvency ratio as key rating strengths. IGI Prudential was formed in May 2023 through the merger of IME General Insurance, which began operations in 2001, and Prudential Insurance, which has operated since 2000. The merger enlarged the company’s net worth, capital base, asset base and operational scale, and increased its risk-bearing capacity. It is now among Nepal’s larger non-life insurers, with about 9% of the market by gross premiums earned and 7% by net premiums earned in fiscal year 2025/26. The agency also noted the support of experienced promoters and senior managers associated with the IME Group and the Vishal Group, whose business networks are expected to aid expansion.

ICRA Nepal expects the company to manage the claims arising in fiscal year 2025/26 through its capital base and anticipated reinsurance recoveries. As of mid-July 2026, the ratio of liquid assets to net insurance contract liabilities, which are total liabilities minus reinsurance assets, stood at 3.23 times, a comfortable liquidity position.

The company retained about 33% of its risks in the year, below the non-life industry average of around 42%, largely because of its high exposure to aviation insurance. Aviation made up about 11% of its gross premiums, against an industry average of roughly 5%. Excluding aviation, its retention ratio was about 37%, still below the industry average. The company plans to raise retention gradually to improve underwriting returns, but ICRA Nepal said this will require tight claims control and stronger reinsurance practices.

Underwriting performance remains a challenge. Claims linked to the riots and unrest of September 2025 pushed the claims ratio from about 68% in fiscal year 2024/25 to around 101% in 2025/26, well above the industry average of roughly 75%. Motor insurance accounted for about 31% of gross premiums and 64% of net premiums, broadly in line with industry trends. ICRA Nepal cautioned, however, that regulatory changes affecting motor insurance could materially affect the company’s performance.

As of mid-July 2026, the largest shareholders were Hem Raj Dhakal with about 6%, Chandra Prasad Dhakal and Usha Investment with about 4.6% each, and Nabil Bank with about 3.6%. Promoters hold 51% of the company and the public 49%.