Kathmandu: Following the strategy of the Nepal Insurance Authority, a total of 17 companies opted for mergers and concluded their merger deal successfully. The Authority has taken a strategy to force insurers to merge to maintain the twofold paid-up capital.
To date, the final merger deal between IME General Insurance and Prudential Insurance was the latest one. Among 17 companies 10 were general insurers whereas the rest 7 were life insurers.
The latest merger among life insurers was the merger of Prime Life Insurance, Guransh Life Insurance, and Union Life Insurance. These three companies merged into Himalayan Life Insurance Company on 26 Baisakh 2080. Similarly, the merger between Sanima Life Insurance and Reliance Life Insurance on 9 Chaitra 2079 was the second merger among life insurance companies. These two companies conducting the integrated transaction under the name Sanima Reliance Life Insurance. SuryaJyoti Life Insurance Co. Ltd which was formed after the merger between Surya Life Insurance and Jyoti Life Insurance became the pioneer company among life insurers formed after the merger. The integrated transaction of Surya Jyoti Life Insurance kicked off on 7 Paush 2079.
According to the instruction issued by the Nepal Insurance Authority on 10 Chaitra 2078, the minimum paid-up capital for life insurance companies and general insurance companies was hiked to NPR 5 billion and NPR 2.5 billion respectively. Earlier, the lower limit of regulatory capital for life insurance and general insurance companies was NPR 2.5 billion and NPR 1.25 billion only.
Most of the companies opted for the merger on the backdrop of restrictions from the regulatory authority to pour additional capital through the issue of right shares. Such restrictions were imposed only on listed companies where a company with foreign direct investment was exempted from the restriction.
Companies that have completed mergers within a year:
1. 1 Sawan 2079: Himalayan General and Everest Insurance together merged into Himalayan Everest Insurance
2. 7 Kartik 2079: Sanima General and GIC General Insurance together merged into Sanima GIC Insurance
3. 7 Paush 2079: Surya Life and Jyoti Life together merged into SuryaJyoti Life Insurance.
4. 17 Magh 2079: Siddhartha Insurance and Premier Insurance together merged into Siddhartha Premier Insurance.
5. 29 Magh 2079: Sagarmatha Insurance and Lumbini General Insurance merged into Sagarmath Lumbini Insurance (Salico).
6. 9 Chaitra 2079: Sanima Life and Reliance Life together merged into Sanima Reliance Life Insurance
7. 26 Baisakh 2080: Gurans Life, Prime Life, and Union Life merged into Himalayan Life Insurance.
8. 27 Baisakh 2080: IME General Insurance and Prudential Insurance merged into IGI Prudential Insurance.
Still, the merger progress between Prabhu Life and Mahalaxmi Life Insurance is under process. Prabhu Insurance and, Nepal Insurance too must opt for a merger to maintain the minimum paid-up capital. Rest of the companies have made fresh commitment to maintain the minimum paid-up capital by the Asar end of current financial year.