Kathmandu: Premier Insurance Company and Sanima General Insurance Company have reached closed to a merger agreement. According to sources, the two companies will reach an agreement within few days.
The Insurance Board(IB) has raised the minimum paid-up capital of non-life insurance companies to Rs 2.5 billion on 24 March 2022. The two companies have agreed to merge to raise the required capital. The IB has also expressed its commitment to assist both the companies in reaching a consensus.
It will be a second merger agreement in a row. Earlier, on last week Everest Insurance Company and Himalayan General Insurance Company had signed a merger agreement.
At present, the paid up capital of Premier Insurance Company is Rs. 1.22 billion while Sanima has Rs 1 billion. With nearly three decades of experience, Premier has a net worth of Rs. 233 per share. But Sanima General, which was established only four years ago, has a net worth of only Rs 124 per share. It also seems to have very low swap ratio for Sanima General.
Adding the paid-up capital of the two companies will reach Rs. 2.22 billion. Adding the amount in the reserve fund of both the companies will be accumulated to Rs. 578.3 million. The post-merger capital fund will exceed Rs. 2.80 billion.
Sanima has investments from NRN, Sanima Group and Corporate Houses. This seems to be an additional support for the Premier Insurance.
At present, the market price of Sanima Life in the secondary market is Rs 510 and that of Premier is Rs 768. In the event of a merger, the shares trading of both the companies will be closed for a long time, so for short-term investors, it will not bring much enthusiasm in the market. But for the long-term investors, shareholders in both companies will be benefited.
