June 30: A few years after the establishment of government-owned re-insurance company, homework is being carried out establish another re-insurance company in the country with investment from the private sector.
The process has moved ahead after several life and general insurance companies came together with the proposal to start a new entity in the area of re-insurance.
Currently, Nepal Reinsurance Company Limited is the only one re-insurer operating in the country under the ownership of the government.
According to a source close to the matter, the government has also been asked to invest in the proposed re-insurance company. It has been reported that name of the proposed entity will be Annapurna ReInsurance Company Limited.
Sakar Law Firm is working on the legal process for the establishment of the new company. According to Bhanubhakta Pokhrel, corporate advocate at Sakar Law Firm, the preliminary process for the company\s formation has been started.
“The company is going to be established under the ownership of few insurance companies and business houses. We have also pitched other insurance companies, banks and business houses for investment,” he said, adding “The process will further move ahead after their investment commitment.” After that, regulation for letter of administration will be prepared and will be forwarded to the Insurance Board (IB) for principle agreement.
According to him, investment commitment for the proposed company is likely to come in the next two weeks. A few days ago, Finance Minister Dr Yubaraj Khatiwada commented about the need to create a new reinsurance company. The establishment of the new entity in the Nepali insurance sector is said to have moved ahead after Dr Khatiwada agreed to the proposal.
The share structure of the company has been proposed at Rs 10 billion out of which 75 percent will be institutional share, whereas 25 percent will be floated to the public. According to advocate Pokharel, it has been proposed that insurance sector will have 30 percent share, business houses will command 25 percent, banks and financial institution will have 10 percent and the government will have 10 percent stake in the new reinsurance company.
According to Shivanath Pandey, CEO of Surya Life Insurance Co Limited they have received a proposal for investment. “However, we are yet to decide on the investment as we are to be become clear about other investors of the proposed reinsurance company,” he said.
IB officials say that the board is yet to receive official information about the establishment of a new re-insurance company. According to Raju Raman Poudyal, executive director of IB, they haven’t received any official proposal regarding the formation of the company. Advocate Pokharel said that they will inform IB only after completion of the process.