KATHMANDU, Nov 4: The government has decided to invest additional funds in the Nepal Reinsurance Company (NRIC) by subscribing to its rights shares, helping the state-owned reinsurer meet the minimum paid-up capital requirement set by the Nepal Insurance Authority (NIA).
A Cabinet meeting held on Tuesday authorized the Ministry of Finance to proceed with the investment, clearing the way for NRIC to comply with the regulator’s capital requirement.
In January 2024, the NIA directed Nepali reinsurance companies to increase their paid-up capital to Rs 20 billion, up from the previous threshold of Rs 10 billion.
Nepal Reinsurance Company issuing 100 pc right shares
Nepal currently has two reinsurance companies in operation: Nepal Reinsurance Company (NRIC) and Himalayan Reinsurance Limited (HRL). While NRIC is a government-backed entity, HRL is Nepal’s first private-sector reinsurance company.
NRIC’s current paid-up capital stands at Rs 13.42 billion. The company plans to raise the additional capital required to reach the Rs 20 billion threshold through a rights share issuance.
The government is the largest shareholder in NRIC, holding a 44.04 percent stake, while the general public owns 16 percent. The remaining shares are held by 20 insurance companies and institutional investors, including Global IME Capital, Guhyeshwari Merchant Banking, Hathway Investment, Global IME Bank, Supreme Cements, IME, Gyan Securities, Vishal Group, and Laxmi Sunrise Bank.
The reinsurer had put its capital expansion plan on hold due to uncertainty over whether the government would participate in the rights offering. The latest Cabinet decision has removed that uncertainty and paved the way for the company to proceed with the capital increase.
The government established NRIC in November 2014 to reduce the large outflow of reinsurance premiums to foreign markets. The company was formed by converting the Insurance Pool, which had been established in 2003 to cover terrorism-related risks, into Nepal’s first reinsurance company with an initial paid-up capital of Rs 2.1 billion.
