Insurance Board mulling over new license to insurance companies; publishes new directive with capital requirement

With the new directive “Insurer Registration & Insurance Operation Directive 2073”, the Insurance Board (Beema Samiti) has opened way to provide license to new insurance companies. Insurance Board is mulling over to provide license to the companies that have registered before 2064 B.S. On March 31, 2017, the Insurance Board had directed all insurance companies to increase their paid up capital by four folds. With the new directive, non-life insurance companies have to increase their paid up capital to Rs 1 arba and life insurance companies have to increase their paid up capital to a minimum of Rs 2 arba by the end of FY 2074/75. It had also directed all insurance companies to unveil their capital plan within 3 months. New insurance companies wishing to obtain the license must fulfill this minimum paid up capital requirement. The new insurance companies must maintain the following share structure requirements:

1. Minimum of 51% for promoters and minimum of 30% for general public (including 5% for its staffs)
2. For joint-venture companies, a maximum of 80% can be set aside for foreign partner. However, if less than 50% of capital is from foreign investment, a minimum of 30% stake should be set aside for public

How many companies are in pipeline to obtain license? As per a source, 13 companies have registered to obtain license for the last 9 years. Established groups like Sanima, IME, Standard, SBI and Mahalaxmi are waiting approval for insurance business license. These new insurance companies must come into operation with the revised capital requirement. The Insurance Board has also made it mandatory to provide share ownership structure, details of fixed assets, management expenses, fundamental strategy for long-term stability and market share and an overall 5-years business plan. How are existing insurance companies going to meet the capital requirement? Out of the 22 insurance companies that are in operation, 10 companies are going to increase their capital by the way of right shares or Further Public Offerings (FPO). National Life Insurance (NLICL) and Himalayan General Insurance (HGI) will easily meet their capital requirements after their respective right offers of 100% and 166.67% while Nepal Life Insurance (NLIC) has already reached the minimum capital requirement of Rs 2 arba.

S.N.	Company	Symbol	Paid Up Capital (in Rs crore)	Proposed Capital Increment
1	Prime Life Insurance Company	PLIC	48.81	-
2	Gurans Life Insurance Company	GLICL	55.00	8% bonus share
3	Surya Life Insurance Company	SLICL	62.50	5% bonus share
4	Asian Life Insurance Company	ALICL	80.55	50% right share
5	Life Insurance Corporation (Nepal)	LICN	106.90	24.80% bonus share
6	National Life Insurance Company	NLICL	133.13	100% right share
7	Nepal Life Insurance Company	NLIC	309.64	-

S.N.	Company	Symbol	Paid Up Capital (in Rs crore)	Proposed Capital Increment
1	Everest Insurance Company	EIC	10.12	-
2	Rastriya Beema Company	RBCL	12.44	-
3	Nepal Insurance Company	NICL	28.76	-
4	United Insurance Company (Nepal)	UIC	30.24	-
5	NB Insurance Company	NBIL	27	100% right share
6	Premier Insurance Company	PIC	44.85	FPO at Rs 1,004 per share
7	Prudential Insurance	PICL	42.76	30% right share
8	Siddhartha Insurance	SIL	44.83	19.23% right share
9	NLG Insurance	NLG	51.23	-
10	Sagarmatha Insurance Company	SIC	53.82	FPO at premium price
11	Prabhu Insurance	PRIN	57.75	-
12	Lumbini General Insurance	LGIL	39.15	100% right share
13	Neco Insurance	NIL	71.29	-
14	Shikhar Insurance Company	SICL	81.76	FPO at Rs 1,620 per share
15	Himalayan General Insurance	HGI	38.52	166% right share

Also see: Know the current paid up capital of insurance companies; see how much increment required