Kathmandu: The authorities of the Insurance Board have informally directed the promoters of four non-life insurers to opt for merger to drop cross-holding. The higher authorities of the Board have personally instructed the promoters of United Insurance, Prudential Insurance, Nepal Insurance and IME General Insurance either to quit their cross-holding for go for merger.
Despite there was informal agreement among United Insurance, Prudential Insurance and Nepal Insurance Company that they would sign MOU for merger and acquisition. The Insurance Board expects IME General Insurance to join the group of three in the merger process. But IME group is neither ready to quit its major holdings in IME General nor to quit the brand. IME Group has already called application for interested investor to buy its holding in Nepal Insurance Company.
Amid the possible merger, the CEO of United Insurance, Upasana Paudel has already resigned. Prabhu Insurance has already signed a MOU for merger with Ajod Insurance.
Now United Insurance’s paid-up capital is Rs. 1.2 billion. Prudential Insurance has Rs. 1.19 billion, while Nepal Insurance has Rs. 1.37 billion paid up capital. All the three companies are not in a position to maintain minimum paid up capital of Rs. 2.5 million by distribution of stock dividend. So, the promoters of these three insurers are under pressure to opt for merger or pour additional capital to meet the regulatory paid-up capital.
The paid up capital of IME General is Rs. 1.73 billion. Even on the life insurance business, IME Life too has not opted for merger or acquisition yet.
