Kathmandu: Prime Life Insurance Company and Himalayan Everest Insurance Company along with Global Equity Fund have registered a joint venture company named ‘Nepal Infrastructures Investment Fund Limited(NIIFL)’. The paid-up capital of the proposed company is Rs. 2.5 billion.
Prime Life, Himalayan Everest Insurance, and Global Equity Fund will have 50, 40, and 10 percent stakes in the NIIFL respectively. It would be the first of its kind investment company promoted as a JV by life and general insurers. These companies are waiting for the nod from the Nepal Insurance Authority.
The new investment company has come into existence following the new Investment Guidelines issued by the Nepal Insurance Authority. The promoter companies are hopeful to diversify their investment to maximize returns for their policyholders and shareholders. According to the new Investment Guidelines, an insurance company can invest up to 10 percent of total investment in the infrastructure sector including agriculture, tourism, and water resources.
In the Investment Guidelines of Life Insurers, only 5 percent of the total investment can be made in an investment company by a life insurer. Prime Life has a total investment of Rs.19.93 billion, so it can invest only up to Rs. 1 billion in the proposed company. Similarly, based on the current total investment profile, Himalayan Everest Insurance can invest Rs.18 million.
The regulatory authority, Nepal Insurance Authority, is in favor of encouraging insurers to diversify their investment beyond their traditional investment practice. At present above 80 percent of the total investment of insurers is concentrated on term deposits of commercial banks. According to the Authority, the size of total investment insurers including 19 life, 18 general, and 2 reinsurance companies is Rs. 5.78 trillion. It accounts for 11 percent of the total deposits of banks
