Big investors eyeing to offload insurance shares spread rumor to manipulate prices

ShareSansar, Aug 19:

Big investors are selling shares of insurance companies believing that the companies will not be able to pay dividends after Insurance Board ordered them to increase the paid-up capital. Every day since the past week, prices of insurance shares have been going up by 10 percent.

Big investors’ are suspected of manipulating the price rise. Though Insurance Board has implemented the provision of increased paid up capital from Shrawan 1, it has not made the decision public.

Insurance Board has directed insurance companies to maintain a paid up that is 1.5 times their liability. The directive has already reached insurance companies and those who have access to this information are taking advantage by offloading shares.

Knowing that they will not get any returns from last year’s earning, board of directors of insurance companies, promoters, shareholders with access are selling off the shares. While rumors have been spread in the stock market that prices are going up because Insurance Board is bringing the provision of increased paid.

Meanwhile, 14 insurance companies have failed to increase their paid-up capital to the required level by Asar end, as directed by Insurance Board. As per IB’s directive, life insurance companies must maintain 50 crore and non-life insurance companies 25 crore in paid up capital.

In order to put pressure on the insurance companies that have failed to increase their paid up, the Insurance Board is planning to contact them separately to enquire about their plan for capital increment.

Of the total life insurance companies, Life Insurance Company and Gurans Life have yet to increase their capital to prescribed level. Similarly, in the nonlife category, except for Sagarmatha and NLG, all the remaining 12 companies have yet to raise their paid up.