19th January 2025, Kathmandu
Himalayan Reinsurance, Nepal’s only private-sector reinsurance company, has seen tremendous growth in just three years since its establishment.
Himalayan Reinsurance IPO Fuels Expansion
The company continues to become stronger and more efficient, with remarkable progress in its operations and productivity. Despite its relatively short history, Himalayan Reinsurance has rapidly expanded its business, reaching new heights.
Boost in Capital Through IPO
The company’s Initial Public Offering (IPO) has significantly enhanced its capital and strengthened its liquidity profile. This infusion of capital has helped the company stabilize its finances and continue expanding. The regulatory support received from the authorities has also facilitated the company’s growth and operations. The Nepal Insurance Authority has contributed to this success by ensuring a portion of both premiums and risks in the domestic reinsurance market.
Expansion into International Markets
Himalayan Reinsurance has expanded beyond Nepal, growing its presence in international markets. Recently, the company received approval from Indian regulators to conduct cross-border reinsurance. In the first year of receiving this approval, Himalayan secured a reinsurance treaty with the renowned Indian company, GIC Re. This achievement boosts the company’s confidence and supports its ambition to expand further into other countries.
Financial Strength and Solid Management
Himalayan Reinsurance has enhanced its financial standing with a strong solvency ratio and quality reserves. The company benefits from private ownership and the backing of two major state-owned commercial banks—Nepal Bank Limited and Rastriya Banijya Bank.
The leadership, including Board Chairman Shekhar Golcha and CEO Upasana Poudel, plays a crucial role in the company’s success. Their expertise and experience, supported by a skilled team, have helped Himalayan Reinsurance rise to prominence.
Supportive Regulatory Environment and Policies
The regulatory environment has played a key role in Himalayan Re’s growth. The Nepal Insurance Authority has mandated that Nepali companies handle a certain percentage of reinsurance domestically. This regulation has helped ensure steady business flow for the company.
Additionally, the government’s decision to allocate 10% of business to two reinsurance companies has further reinforced Himalayan Re’s market position. The Insurance Authority’s directive to prioritize domestic companies for specific types of reinsurance has also benefited the company.
Impressive Financial Results and Growth
Himalayan Reinsurance has posted outstanding financial results. In the last fiscal year, the company earned NPR 5.46 billion in premiums and paid out NPR 2.75 billion in claims. The company reported a profit of NPR 1.28 billion, with an earnings per share (EPS) of NPR 12.34.
In the first three months of the current fiscal year, Himalayan Re generated NPR 930 million in premiums and incurred NPR 490 million in claims. The company’s profit in this period was approximately NPR 230 million, with an EPS of NPR 8.71. The net worth stood at NPR 159.16 per share, and the price-to-earnings (PE) ratio was 103.56.
Efficient Operations and Cost Management
The company has kept its operational costs in check. Management expenses account for only 12% of earned premiums, while commission expenses make up 25%.
These efficiencies have been key in maintaining profitability despite the challenges of business expansion. Himalayan Re’s focus on efficient operations and cost control has helped it sustain strong financial results.
Challenges and Risk Management Strategy
As Himalayan Re’s portfolio grows, it faces the challenge of managing retrocession coverage. The company’s management team, experienced in both Nepal and India, will determine the right coverage to handle potential losses.
While an aggressive retrocession strategy helps mitigate risks, the company is aware of the possible impacts of large-scale disasters on its profitability and solvency. However, with its solid management and risk strategies in place, Himalayan Re is prepared to handle such challenges.
Bright Future Ahead for Himalayan Reinsurance
Himalayan Reinsurance is well-positioned to continue its impressive growth. The company has proven its ability to expand rapidly and effectively manage its business.
With ongoing success in securing major reinsurance deals, strong financial results, and capable leadership, the company’s future looks bright. As Himalayan Re continues to expand its international presence and innovate, it is set to become a leading player in the global reinsurance market.
Himalayan Reinsurance IPO Fuels Expansion
