Kathmandu: Nepal Insurance Authority has asked for the progress report of insurance companies to meet the deadline for paid-up capital fulfillment. The Authority has summoned the members of the Board of Directors(BODs) and Chief Executive Officers(CEOs) of insurance companies together to submit their progress reports.
The Authority has provided a deadline up to Chaitra 2079 to almost double the paid-up capital of both life and general insurance companies. Life insurers are obliged to raise their paid-up capital to Rs. 5 billion and the general insurers have been instructed to maintain at least Rs. 2.5 billion paid-up capital by the deadline.
All 38 insurance companies had submitted their capital increment plan to the Authority following the instruction given on 10 Chaitra 2078 for capital increment. Except for Nepal Life Insurance Company(NLIC), the rest of the companies have yet to meet their paid-up capital requirement though only four months left.
The Authority has already inquired with the BODs and CEOs of United Insurance, Siddharth Insurance, Prudential Insurance, Nepal Insurance, Neco Insurance, Prabhu Life, Mahalakshmi Life, Asian Life, and IME Life insurance about their progress report.
Among 19 insurance companies signing the MoU for the merger, only six companies have concluded their merger. Non-life insurance companies, Himalayan General and Everest Insurance have formed Himalayan Everest Insurance while Sanima General and General Insurance together have formed Sanima GIC Insurance after mergers. Similarly, in life insurance, Surya Life and Jyoti Life started an integrated business under the name of Surya Jyoti Life on the 7th of Paush 2079.
Premier Insurance and Siddharth Insurance have announced the date for the special general meeting with a special proposal for the merger.
Similarly, Neco Insurance has said that it will seek permission for the stock dividend and rights shares for insufficient capital. IME Life, Reliable Nepal Life, Sun Nepal Life, and Citizen Life are in the process of raising capital on their own. Mahalakshmi Life and Prabhu Life Insurance are supposed to raise insufficient capital through the right shares after their merger.
According to sources, due to time constraints, six more companies are in pipeline to sign MoU for mergers. A narrow space left for United Insurance, Prudential Insurance, Nepal Insurance, NLG Insurance, and IME General to raise capital without opting for mergers or acquisitions.
The Authority is not in favor of allowing insurers to raise capital through a right share issue to the public above 20 to 30 percent.