What is financial position of 3 insurance companies opting for merger?

May 22, 2022 04:14 PM Merolagani

Insurance companies are consecutively signing merger agreement with suitable partner companies ever since the Insurance Board (IB) directed them to increase paid-up capital in order to increase their risk capacity and expansion of their business.

Accordingly, Prime Life, Gurans Life and Union Life Insurance signed initial merger agreement as per the Insurer Merger/Acquisition Related Guidelines, 2076.

As per the IB direction, the life insurance companies are required to maintain paid-up capital  of Rs 5 billion while non-life insurance companies are required to maintain paid-up capital of Rs 2.50 billion.

The aforementioned companies signed the merger agreement to reach the minimum requirement of paid-up capital. The companies will decide the swap ratio after DDA report.

All three of them had maintained the previously set paid-up capital requirement of Rs 2 billion, however, as the IB raise the bar to Rs 5 billion, the companies have opted to merger to meet the capital.

Out of three, Prime Life has the highest paid-up capital of Rs 2.77 billion followed by Union Life of Rs 2.15 billion and Gurans Life of Rs 2.08 billion.

If the companies merge with a swap ratio of 1:1, the joint entity will have paid-up capital of Rs 7.01 billion.

In terms of reserve fund, Union Life has reserve fund of Rs 1.09 billion, Gurans has Rs 548.2 million and Prime Life has Rs 505.4 million.

In terms of life insurance fund, Prime has the highest fund of Rs 17.63 billion followed by Gurans life with Rs 12.06 billion and Union Life of Rs 10.34 billion.

In terms of net insurance premium, Union Life leads other with Rs 5.99 billion in premium collection followed by Prime Life of Rs 3.49 billion and Gurans Life of Rs 2.35 billion.

In terms of net profit, Prime Life earned the highest net profit of Rs 189.5 million, Gurans Life earned Rs 131.6 million and Union Life earned Rs 27.2 million.

During the period, Prime Life has EPS of Rs 9.08, Gurans Life has EPS of Rs 8.41 and Union Life has EPS of Rs 1.68.

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