Kathmandu: Surya Life Insurance Company and Jyoti Life Insurance Company have signed memorandum of understanding(MOU) for merger and acquisition. Chairman of Surya Life Insurance Company Keshav Prasad Bhattarai and Chairman of Jyoti Life Nanda Kishor Sharma signed the agreement today.
The chairman of both the companies announced that it was a preliminary agreement and agreed that the swap ratio would be decided only after the DDA and the rest of the process for merger would be decided.
After the merger, the paid-up capital and reserve of the two insurance companies will total to Rs 6.13 billion. At present, the paid up capital of Surya Life is Rs 2.55 billion while that of Jyoti Life is Rs 2.42 billion. If the merger takes place on an equal footing, the paid-up capital will reach Rs 4.97 billion. Similarly, after the merger, the reserve fund will exceed Rs 1.16 billion. With the utilization of the reserve fund, additional required capital can be raised.
At present, Jyoti Life has a net worth of Rs 127 per share while Surya has a total of Rs 120. After the merger of the two companies, the size of life insurance fund would reach Rs 19.1 billion.
Surya Life is far ahead in the branch network and agent network. At present, Surya has 405 employees and Jyoti has 404 employees. Jyoti looks ahead of Surya Life in terms of earnings per share. Surya Life’s management expenses is high while Jyoti Life has very low.
The chairman of both companies have assured that all the employees will remain wit the company even after the merger and acquisition.
This is the second merger agreement between life insurance companies in Nepal. Earlier, Union Life Insurance, Prime Life Insurance and Guransh Life Insurance have signed MOU for merger. The merger agreement between Himalayan General Insurance and Everest Insurance has already been concluded.