NB Insurance on the verge of collapse

ShareSansar, October 21:

NB Insurance Company Limited, which has been providing non-life insurance service, is on the verge of collapse.

The company’s failure to follow institutional good governance, to submit its financial reports to the regulatory authority and to even renew its license are among some of the factors that has led it a critical condition.

“We are kept in dark about the financial health of the company since they are yet to furnish the report of due diligence audit,” a source at Insurance Board said, adding that the company’s net worth is negative.

In September IB had directed the insurance company to conduct a due diligence audit (DDA) after the company could not furnish their annual financial reports for the last two fiscal years.

Sources say that IB directed NB Insurance Company to do the DDA after it kept turning a deaf ear to repeated directives to furnish its financial reports.

IB has also asked the insurance company not to make any expenses apart from the regular ones until it completes the DDA.

The insurance company has not submitted its annual financial reports for the fiscal year 2068/69 and 2069/70 due to its internal problems, and its annual financial report for the fiscal year 2067/68 had shown its paid-up capital stood at Rs 10 crore, and loss of Rs 7.9 crore.

Though IB has directed all the non-life insurance companies to raise their paid-up capital to Rs 25 crore, NB Insurance has not been able to comply as its major promoter, NB Group, are blacklisted as bank loan defaulters.

Though NB Bank, the other major investor in the insurance company, has given verbal assurance to IB to soar up the paid-up capital, it is yet to actually invest the sum, according to IB sources.

After assurance from the NB Bank, the insurance company has recently furnished its interim management plan to IB.

“We are reviewing the plan,” a source at IB said. “But we cannot say anything as of now, as the condition of the insurance company is critical.”