Insurance Authority Allows 4 Insurers for IPOs at Premium, Now The Ball is in SEBON’s Court

Kathmandu: Nepal Insurance Authority has allowed four life insurance companies to issue IPO at a premium. The Authority has allowed Reliable Nepal Life Insurance Company, Citizen Life Insurance Company, Sun Nepal Life Insurance Company, and IME Life Insurance Company to issue IPO at a premium not exceeding twice the net worth.

The Authority has given the approval on the ground that in the Companies Act 2063 there is a provision that IPOs can be issued on premium. The Authority has further argued that since Insurance Act 2079 or Regulations 2049 has no restriction on issuing IPOs at a Premium, so it has paved the way. Contrary to that, the Security Exchange Board of Nepal (SEBON) has been denying these insurers to give a nod on the ground that neither the Insurance Act 2079 nor Insurance Regulations 2049 has the provision for allowing insurers to issue IPOs at a premium.

It is entrusted to SEBON to decide whether to issue IPOs at a premium or not. The Authority has given permission on the condition to receive approval from SEBON. Reliable Nepal was the first to approach both regulatory authorities for IPOs issues at a premium.

Currently, the paid-up capital of Citizen Life is Rs. 2.62 billion, while the reserve fund is Rs. 1.25 billion. Similarly, Sun Nepal Life has Rs. 2.24 billion paid-up capital and Rs. 737.7 million reserve fund. IME Life has Rs. 2.80 billion and Rs. 1.4 billion in paid-up capital and reserve fund. Similarly, Reliable Nepal Life Rs. 2.80 billion and Rs. 1.28 billion.

As per the existing provision, an insurer must issue IPOs at least to collect 30 percent of its paid-up capital. Reliable Nepal will issue 12 million shares of IPOs at a rate of Rs. 220 with a premium of Rs. 120. The insurer plans to collect  Rs.1.44 billion from the public.

Similarly, Citizen Life targets to issue 11.2 million shares for IPOs and IME Life to issue 12 million shares, and Sun Nepal Life will issue 96 million shares.

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