News Regulations23 Feb 2018

Nepal:Insurers rush to issue rights shares

23 Feb 2018

Six insurance companies are preparing to issue rights shares to raise a combined total of NPR7 billion (US$67 million).

According to the Securities Board of Nepal (SEBON), the six insurers are to issue right shares of such quantity on the basis of applications they have already submitted to the Board, reports Republica.

Surya Life Insurance (2,887,500 units) is to give four rights shares for every 10 shares held by current shareholders and the NIC Asia Capital is the issue manager.

Siddartha Insurance (2,244,973 units) is issue 3.5 rights shares for every 10 shares held and the NMB Capital has been chosen as its issue manager.

Gurans Life Insurance has appointed the Laxmi Capital Market as the issue manager for the allotment of 2,907,000 rights shares. It is providing one rights share for every two units held by existing shareholders.

Everest Insurance Company is allotting 7,290,000 rights shares through the Siddhartha Capital. National Life Insurance is the fifth company with plans for rights shares numbering 9,936,477. NIBL Capital has been appointed the issue manager.

The sixth insurer is Nepal Insurance which has been preparing to issue 3,019,886 rights shares. NIBL Capital is its issue manager.

The main reason that the insurers are raising funds is to meet capital requirements.

Last year, Prudential Insurance, a non-life insurer, issued 1,283,040 rights shares worth NPR128.30 million to its shareholders while seven other insurers registered bonus shares valued at NPR990.32 million, according to Kathmandu Post.

The insurance regulator, Nepal Insurance Regulatory Authority, has directed life and non-life insurance companies to boost their paid-up capital by mid-July this year with the intention of strengthening their capacity. Life insurers are to maintain a minimum paid-up capital of NPR2 billion, up from the existing NPR500 million, while non-life insurance companies have been told to boost their minimum paid-up capital to NPR1 billion from the current minimum required NPR250 million.

The regulator decided last March to increase the insurers' minimum capital. New insurance companies have been granted licences under the increased capital requirement.

There are 17 non-life insurers and 19 life insurers operating in Nepal. A total of 22 insurance companies are listed on the Nepal Stock Exchange.

According to capital increment plans submitted last year by the insurers to the regulator, 10 companies said that they would meet the new capital requirement by making further public offerings of shares while the rest intended to issue rights and bonus shares.


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