Leading brokerage houses in Oman have backed the initial public offering of National Life and General Insurance Company, which will close subscription on November 20.
“Overall, we rate the IPO as an above average issuance which gives investor an exposure to the leading insurance company in Oman with exposure in the GCC markets. Our weighted 12‐month fair value of NLGIC works out to be OMR0.345, an upside of 8 per cent from the offer price,” said Gulf Badeer Capital Markets in its note.
”We recommend “subscribe” for the IPO of National Life and General Insurance. The fair value of the company comes out to be OMR0.358 per share, implying an upside of 12 per cent to the IPO price of OMR0.320 per share,” added U Capital.
In 2016, profit of the company went up by 8 per cent to OMR4.7 million and for 2017, the company projects income of OMR 8 million. As of September 2017, the company made profit of OMR7.1 million, which is 89 per cent of its estimated profit for 2017.
“Mandatory health insurance is set to be introduced next year in Oman. We believe this proposition has wide ranging positive outcome on NLGIC as it is the leader in this segment. As per our conservative analysis, the net income of the company for 2018 will increase from OMR9.3 million to OMR11.6 million and the earnings per share will rise from 35 baisas per share to 44 baisas per share,” U capital noted.
Recently, NLGIC announced that an agreement has been reached on the acquisition of Inayah TPA, a UAE-based third party medical claims administrator and also got license to operate in Kuwait
The company has been a market leader in health insurance in the Sultanate and has well established footings in UAE and other regional markets. This has resulted in some distinct results for the company, especially the returns to equity.
As a result, the shareholder’s worth has been increasing consistently, from OMR19.8 million in 2013 to OMR44.4 million in 2016 (which includes issued and paid up capital increase of OMR16 million during 2016). The company believes that with its current market standing, and further by application of carefully crafted strategies for various operational segments, the shareholders’ worth will increase to OMR77.7 million by 2021 and ROE will increase from 17.1 per cent in 2017 to 20.6 per cent in 2021.Resultantly the shareholder’s worth has been increasing consistently i.e. from OMR19.8 million in 2013 to OMR44.4 million in 2016.