Government Approves Additional Right Share Investment in Nepal Reinsurance; NRIC Hits 15% Positive Circuit Today

The Government of Nepal has given in-principle approval for an additional right share investment in Nepal Reinsurance Company Limited (NRIC), a decision that immediately boosted investor sentiment, with the company’s share price hitting the 15% positive circuit in trading today.

The decision was taken by the Council of Ministers at its meeting held on Kartik 17.

The government has approved the proposal to increase its investment in Nepal Reinsurance through an additional right share subscription.

The decision is significant as the company has been unable to move forward with its planned right share issuance for a prolonged period due to the absence of a government decision regarding additional capital investment.

As the Government of Nepal is a major shareholder in Nepal Reinsurance, its participation in the proposed rights issue is considered important for the company’s capital expansion plan.

Following the government’s decision, shares of Nepal Reinsurance Company surged by 15% in today’s trading session, hitting the positive circuit limit.

The sharp rise reflects increased investor interest following the government’s approval, particularly as the additional right share investment is expected to help the company strengthen its capital base and meet regulatory requirements.

The government’s decision is expected to make it easier for Nepal Reinsurance to achieve the minimum paid-up capital requirement of Rs. 20 Arba prescribed by the Nepal Insurance Authority.

The company currently has a paid-up capital of approximately Rs. 13.42 Arba.

The proposed additional rights issue is therefore expected to help bridge the capital gap and enable the company to proceed with its long-pending capital expansion plans.

The additional capital is expected to strengthen Nepal Reinsurance’s financial position and enhance its risk-bearing capacity.

A stronger capital base would allow the company to underwrite larger risks and expand its reinsurance capacity while improving its financial strength and credibility in both domestic and international markets.

The development could also support the broader insurance sector by enabling greater reinsurance capacity within the country.

The expansion of domestic reinsurance capacity could help Nepal retain a larger portion of risks associated with major infrastructure, hydropower and industrial projects within the country.

Economic experts have argued that stronger domestic reinsurance capacity could reduce the amount of reinsurance premiums flowing overseas while supporting the development of Nepal’s insurance and financial ecosystem.

Nepal Reinsurance has been under pressure to increase its paid-up capital to meet the regulatory requirement set by the Nepal Insurance Authority.

The government’s latest decision is therefore considered a major step toward enabling the company to proceed with its capital expansion.

Further details regarding the amount of additional government investment, the right share ratio, and the formal implementation process are expected to be announced following the government’s in-principle approval.