Kathmandu: In a fresh move for the merger, Siddhartha Insurance Company(SIL) and Premier Insurance Company (PIC) have agreed to merge. The Chairman of the Board of Directors(BODs) of both companies has signed a memorandum of understanding today.
Ratan Lal Kedia from Siddhartha Insurance and Suresh Lal Shrestha from Premier Insurance have signed the MoU on behalf of the BODs of both the companies. Both companies have already requested Nepal Stock Exchange (NEPSE) to stop share trading in the secondary market unless the merger process concludes.
The Insurance Board has consistently put pressure on the insurance companies to merge or acquire with the strategy to trim the number of insurers. Currently, there are 20 non-life insurers and 19 life insurers. The number of non-life insurers will shrink to 19 from July 17, since Himalayan General and Everest Insurance Company agreed for a joint transaction on that day after their successful merger.
The insurance regulatory authority, Insurance Board, has assigned Rs. 2.5 billion minimum paid-up capital for the non-life insurers which is almost double to existing minimum paid-up capital. After the merger of Sidhhartha and Premier Insurance, the minimum paid-up capital specified by the Insurance Board will be achieved.
At present, Siddhartha’s paid-up capital is Rs 1.28 billion, while Premier Insurance has is Rs 1.22 billion. If merged on an equal footing, the paid-up capital will reach Rs 2.5 billion. Both companies have stated that the swap ratio will be decided only after DDA.
Kedia Group and Siddhartha Bank are the major promoters of Siddharth Insurance. The major promoters of PIC include ICTC group6 with ~30% holding, Hama Group7 with ~12%, and Beltronix Group8 with ~8% holding.
This is the fourth merger agreement among insurers after the Insurance Board proposed for increment in paid-up capital for both life and non-life insurers.
