Insurance Board asks insurance companies with low paid up to seek merger

ShareSansar, July 25:

Insurance Board has exerted pressure on insurance companies that have failed to increase their paid up capital to the required level to seek merger.

The board had issued a directive three years ago asking life insurance companies to maintain a paid up capital of Rs 50 crore and general insurance companies to Rs 25 crore by the end of FY 2069/70.

Till now only six insurance companies – four life insurers and two general insurers – have increased their paid up to the prescribed level.

Life Insurance Corporation, Prime Life, Lumbini, Prudential, Siddhartha, Asian Life and Nepal Insurance Company had increased their paid up through call in advance.

Out of them, only Prime and Asian Life have been able to increase the paid up to the required level.

Out of total 25 insurance companies, 13 are planning to raise their paid up through call in advance with a plan to issue rights shares later.

Meanwhile, Nepal Life, National Life and Sagarmatha have met the target by issuing bonus shares.

While Everest and Nepal Insurance Corporation have no plans, Neco and Premier are preparing for merger. In case of Prime Life, promoters contributed the amount that was deficit after issuing bonus shares. Likewise, NLG increased its paid up by issuing IPO.

The paid up rule does not apply to Met Life Alico, National Insurance and Oriental Insurance as they operate as branches of foreign companies.    

Investors are still expecting good percentage of bonus share and cash dividend from the insurance companies which has good and high amount on reserve and insurance fund. Investors are paying high price for the company which has strong reserve and insurance fund.

FINANCIAL HIHGLIGHTS OF INSURANCE COMPANIES

                                                                                                                                                                                                    Rs. In ‘000’

# Bonus share of FY 2068/69 is not capitalized on 3^rd quarter unaudited report of FY 2069/70.

*denotes paid up capital once bonus share is capitalized.

                                                                                                                                                                                                 Rs. In ‘000’

 # Bonus share of FY 2068/69 is not capitalized on 3^rd quarter unaudited report of FY 2069/70.

*denotes paid up capital once bonus share is capitalized.