How will the prices of non-life insurance companies change after they meet their capital mark? Find out!
Thu, Jun 6, 2019 4:32 PM on Exclusive, Stock Market,
The last time we talked of adjusted prices of Non-life insurance companies after they meet their capital requirement was approximately 5 months ago. That time only four companies had met the minimum capital mark and not so much has changed now too. As seen in the table below only 4 companies have met their minimum paid-up capital requirement of Rs 1 arba successfully.
| S.No | Symbol | Company | Total Paid-up Capital (Rs) | Status | Remaining amount |
|---|---|---|---|---|---|
| 1 | NIL | Neco Insurance Company Limited | 1,176,278,000 | Met | - |
| 2 | SICL | Shikhar Insurance Company Limited | 1,057,310,600 | Met | - |
| 3 | HGI | Himalayan General Insurance Company Limited | 1,027,200,000 | Met | - |
| 4 | PRIN | Prabhu Insurance Company Limited | 1,005,076,000 | Met | - |
| 5 | IGI | IME General Insurance Limited | 972,000,000 | Not met | 28,000,000 |
| 6 | LGIL | Lumbini General Insurance Limited | 880,000,000 | Not met | 120,000,000 |
| 7 | SIL | Siddhartha Insurance Limited | 865,918,400 | Not met | 134,081,600 |
| 8 | PICL | Prudential Insurance Company Limited | 641,520,000 | Not met | 358,480,000 |
| 9 | NLG | NLG Insurance Company Limited | 640,406,000 | Not met | 359,594,000 |
| 10 | NICL | Nepal Insurance Company Limited | 617,639,000 | Not met | 382,361,000 |
| 11 | PIC | Premier Insurance Company Limited | 584,000,000 | Not met | 416,000,000 |
| 12 | SIC | Sagarmatha Insurance Company Limited | 538,292,000 | Not met | 461,708,000 |
| 13 | UIC | United Insurance Company (Nepal) Limited | 302,400,000 | Not met | 697,600,000 |
| 14 | EIC | Everest Insurance Company Limited | 273,983,000 | Not met | 726,017,000 |
| 15 | RBCL | Rastriya Beema Company Limited | 266,639,000 | Not met | 733,361,000 |
However other things have changed as almost all the companies have endorsed or are in the process of issuing of right of bonus shares to meet the capital mark. The detail is shown in the table below:
| S.No | Symbol | 2074/75 FY dividend or Right | Remarks | Adjusted capital | LTP as of June 06, 2019 | Adjusted Price | |
|---|---|---|---|---|---|---|---|
| Right shares (%) | Bonus (%) | ||||||
| 1 | IGI | 5 | Subject to approval from IB and AGM | 1,020,600,000 | 381 | 363.00 | |
| 2 | LGIL | 20 | Endorsed from SGM | 1,056,000,000 | 481 | 418.00 | |
| 3 | SIL | 15.48 | Book cloure on June 13, 2019 | 1,000,000,063 | 571 | 495.00 | |
| 4 | PICL | 40 | 12 | Assumed | 1,005,903,360 | 674 | 438.00 |
| 5 | NLG | 60 | Endorsed from SGM | 1,024,649,600 | 795 | 535.00 | |
| 6 | NICL | 65 | Right share process is over | 1,019,104,350 | 382 | 382.00 | |
| 7 | PIC | 79.79 | Subject to approval from IB and AGM | 1,049,973,600 | 1,121 | 623.00 | |
| 8 | SIC | 86 | Book closure on June 16, 2019 | 1,001,223,120 | 1,355 | 729.00 | |
| 9 | UIC | 240 | Added to SEBON's pipeline | 1,028,160,000 | 980 | 359.00 | |
| 10 | EIC | 300 | Ongoing issue | 1,095,932,000 | 408 | 408.00 | |
| 11 | RBCL | 275.04 | Assumed | 1,000,002,906 | 10,401 | 2,775.00 | |
IME General Insurance (IGI) has proposed bonus share of 5% from the profit of FY 2074/75, which is yet to be approved from the company's Annual General Meeting (AGM) and the Insurance Board (IB). Once the bonus is approved, the capital will rise to Rs 1.02 arba meeting the mark. As of June 06, 2019 the price of IGI stands at Rs 381 and post the bonus adjustment the price will fall to Rs 363.
Lumbini General Insurance (LGIL) recently held Special General Meeting and endorsed 20% right shares, which will take the current paid-up capital to Rs 1.05 arba. Thus, post the issuance of rights the current price of Rs 481 will fall to Rs 418. Dividend of 74/75 FY is yet to be announced by the company.
Siddhartha Insurance (SIL) has declared bonus shares of 15.48% and the book closure for same has been declared for June 13, 2019. Once the bonus is approved from the AGM the capital of SIL will reach Rs 1 arba. Similarly, post bonus the current price of SIL will be adjusted to Rs 495 from Rs 571 as of 6th June, 20019 closing.
Prudential Insurance company (PICL) hasn't declared any right or bonus shares as of yet. However, the company's capital is missing the minimum mark by Rs 35.8 crore. Therefore, assuming the company will issue 40% right and 12% bonus shares, its capital post adjustment will reach Rs 1 arba. As per the capital plan, the company was supposed to issue 40% right shares in FY 2073/74 and the 12% bonus is supposed to come from the profit of FY 2074/75. Assuming that the company will issue both in this AGM, its current price of Rs 674 will be adjusted to Rs 438 in the secondary market.
NLG Insurance (NLG) also held SGM and from it they have endorsed 60% right shares. Post the issuance the paid-up capital will reach Rs 1.02 arba. The current LTP of NLG stands at Rs 795, which post adjustment will stand at Rs 535. The company is yet to announce any dividend from last FY.
Nepal Insurance Company (NICL) had issued 65% right shares and post the adjustment of rights, its capital will reach Rs 1.01 arba. Since the process is already over, the price has been already adjusted. Its LTP as of 6th June is Rs 382. The company is yet to announce any dividend from last FY.
Premier Insurance Company (PIC) has also endorsed bonus shares of 79.79%, which is still subject to approval from IB and the company's AGM. After the distribution of bonus shares, the company's capital will reach Rs 1.04 arba. Similarly, the current LTP of Rs 1,121 will be adjusted down to Rs 623.
Sagarmatha Insurance Company (SIC) has endorsed 86% bonus shares, the book closure for which has been set on June 16, 2019. After the adjustment of bonus shares the capital will reach of Rs 1 arba. Likewise, the price of SIC will be adjusted from Rs 1,355 to Rs 729.
United Insurance Company (UIC)'s 240% right shares has been added to SEBON pipeline. Post the adjustment of right shares the capital will reach Rs 1.02 arba. Likewise, the price will also be adjusted from Rs 980 to Rs 359. The company is yet to announce any dividend from last FY.
Everest Insurance Company (EIC) is currently issuing 300% right shares. Once the issue is fully allotted the capital will reach Rs 1.09 arba. The book closure for this issue has already been done, so the price is already adjusted. The company is yet to announce any dividend from last FY.
Rastriya Beema Company (RBCL) despite huge reserves the company hasn't held AGM since FY 2067/68. Therefore, in order to meet the capital mark, the company will have to issue 275.04% or more bonus shares for its shareholders. The large reserve size makes it adequately capable to issue such huge bonus and it the same time, this has led the price of RBCL to Rs 10,401. However, post bonus distribution the capital will reach Rs 1 arba and the price will settle down to Rs 2,775.
Disclaimer: This study is done to access the change in market price of non-life insurance companies after they meet their minimum paid-up capital requirement. In the period the price of shares will change based on other exogenous factors and market changes. Investors are advised not to base their decision on this article only.
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