Kathmandu: Nepal Insurance Authority has instructed insurance companies to raise additional capital through initial public issues(IPOs) as soon as possible. Such instruction has been given to the companies which have yet to issue IPOs as per their capital structure.
Surya Prasad Silwal, Chairman of the Authority said that instruction has been given to issue the IPOs as soon as possible as the deadline for regulatory capital fulfillment is nearing. He also admitted that as per prevailing law a company can offer IPOs after three years of profit recorded balance sheet, but some companies have not issued IPOs for the last five years.
According to the Authority, Sun Nepal Life, IME Life, Citizen Life, Mahalakshmi Life, and Reliable Nepal Life Insurance have not issued IPOs yet. Among these, Mahalakshmi Life has signed a merger agreement with Prabhu Life Insurance. Prabu Life has already raised additional capital through IPOs.
It has been learned that the application of some of the life insurers is long pending at the office of the Securities Board of Nepal(SEBON). Reliable Life along with some other life insurers has submitted applications to issue IPOs at a premium. The Authority has denied allowing insurers to raise additional capital through right share issues to the public. It has asked insurers to arrange capital either through a stock dividend or mergers/acquisitions.
The Authority has instructed the life insurance companies to maintain a minimum capital of Rs. 5 billion by Chaitra end of 2079(Mid March 2023). Some companies have already opted for mergers with other life insurers to meet the regulatory capital need.
The Nepal Securities Board is reluctant to allow insurance companies to issue IPOs at a premium. On the other hand, the Authority is saying that if the Securities Board gives permission, it has no objection.
