Life insurance companies struggle to meet extended deadline for paid-up capital

Kathmandu: Life insurance companies are struggling to arrange paid-up capital to meet the regulatory minimum paid-up capital. Most life insurers are hopeful to get favor from the insurance regulatory authority to raise equity capital through the right shares.

Out of 15 life insurers, only 3 life insurers Nepal Life Insurance, National Life Insurance, and Himalayan Life Insurance have achieved the targeted paid-up capital. The minimum regulatory capital for life insurance companies is NPR 5 billion.

The new deadline set for the regulatory paid-up capital is Asar 2080. Earlier, the deadline was set for Chaitra 2079. Nepal Insurance Authority extended the deadline upon the request of the life insurers. Following the new regulatory capital, a total of seven life insurers are merged into three life insurance companies, Sanima Reliance Life, Suryajyoti Life Insurance, and Himalayan Life Insurance. Both Sanima Reliance Life and Suryajyoti Life still need additional equity capital to meet the target of regulatory capital.

Prabhu Life and Mahalakshmi Life have announced to launch of an integrated business from the last week of Asar 2080. After the merger of these two, the paid-up capital will reach 4 billion 29 million.

Out of the 15 life insurers in operation, Asian Life Insurance and LIC Nepal have not opted for the merger. Asian Life needs an additional 58.46 percent capital to achieve NPR 5 billion. The Board of Directors of LIC India, the major promoter of LIC Nepal, has already made decisions to pour an additional 88 percent of equity capital. The Insurance Authority has not given any approval for the additional FDI to LIC Nepal.

The state-owned life insurer, Rastriya Beema Sansthan, will initially raise capital through rights shares. After that, it planned to issue an IPO at a premium. Before, all that it must accomplish its long pending financial audit and annual general meetings.

Four life insurers viz Citizen Life, IME Life, Reliable Nepal, and Sun Nepal Life will arrange additional equity capital through the issue of IPOs at premium.

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