AM Best has assigned a Financial Strength Rating of B (Fair) and a Long-Term Issuer Credit Rating of “bb+” (Fair) to Himalayan Re.
The agency described the outlook to these ratings as being ‘stable’ and that the company’s balance sheet was strong. It also said it had an adequate operating performance, limited business profile, and appropriate enterprise risk management.
AM Best said it viewed the company’s initial capitalisation of $59m in paid-up capital to be supportive of the company’s planned growth over its five-year start-up phase. Additionally, financial flexibility is expected to be enhanced by the company’s plan for public listing over the near to medium term.
The agency stated that it expects the company to maintain a low-risk investment portfolio, with a majority allocation to cash and term deposits, and the remainder mostly in fixed income securities. Offsetting balance sheet considerations include the company’s exposure to severe catastrophe events, albeit the risk is mitigated in part through the use of retrocession.
Himalayan Re is a relatively new entrant to the market, and received its operating license in Nepal in June. This makes it the second reinsurer in Nepal, along with Nepal Reinsurance, after it was deemed fit to do so by Chairman of the Insurance Board, Surya Prasad Silwal.
