To Maintain Capital Growth of Life Insurance of Nepal : How Many Right Shares should be Issue

Mar Sat 2022 08:03:35


To Maintain Capital Growth of  Life Insurance of Nepal : How Many Right Shares should be Issue

Kathmandu. Like non-life, life insurance companies have to increase their paid up capital. According to the Insurance Committee, the regulatory body, life insurance companies have to raise a minimum capital of Rs 5 billion.

Until now, the minimum capital of life insurance companies was set at Rs 2 billion. With the new directive of the committee, companies other than Nepal Life Insurance will have to raise at least Rs. 5 billion in paid up capital by mid-April 2079 BS.

As Nepal Life's paid-up capital is more than Rs 5 billion, or more than Rs 8.20 billion, there is no pressure on the company to increase its capital. Of the remaining companies, Rastriya Bima Sansthan has the most pressure. Five of the life insurance companies are yet to issue IPOs. Among them are Mahalakshmi, Citizens, Sun Nepal, Reliable and IME Life Insurance. They are currently in the process of issuing an IPO.

Apart from issuing IPOs, the capital of seven companies, including Rastriya Bima Sansthan, will have to be increased by more than 100 percent. Sanima and Prabhu Life will be able to increase their capital by 150/150 percent, Gurans by 139.90 percent, Reliance by 138.10 percent and Union Life by 132.56 percent.

Most life companies are more likely to raise capital through rights issues. If bonus shares are given, the percentage of the entitlement will decrease. However, in the event of capital increase not only from bonuses and entitlements, companies will also be able to merge and acquire each other. The committee has directed to take force merger if the paid up capital is not reached within the stipulated time.