By the end of the FY, 9 life insurance companies and 10 non-life insurance companies have signed a merger agreement with other companies.
Out of them Himalayan General Insurance and Everest Insurance have already started joint transactions in the name of Himalayan Everest Insurance from July 17.
As per IB direction, the merger opting companies will get tax concession and other facilities in capital gain, dividend and employees retirement fund payment levied as per Income Tax Act.
The board had directed companies to increase their paid-up capital to increase their risk-bearing capacity. As per the directive, the life insurance companies are required to increase their capital to Rs 5 billion and non-life insurance companies to Rs 2.5 billion.
Accordingly, out of 39 insurance companies including 19 life and 20 non-life insurance companies, 48.72 percent i.e. 19 companies (9 life and 10 non-life) have signed a merger agreement.
Among them, Nepal Life has already met the minimum required paid-up capital. Apart from Nepal Life, all companies soon or later will have to go into a merger as there is a minimum possibility to meet the capital with other options.
However, as the last FY has ended, the companies which will now sign the merger agreement miss the privileges given by IB in the last FY.
Although, many companies are said to be in search of merge partners. Moreover, the board has also stressed on the merger of companies having cross-holding ownership.
As per IB, Prudential and Nepal Insurance are in discussion for merger as they have cross-holding ownership of Bishal Group.
Similarly, Neco Insurance, United Insurance and NLG Insurance are also in merger talk as they have a cross holding of Rastriya Banijya Bank.
Likewise, IME Life Insurance and Reliable Life Insurance have also speeded up merger talk as they have cross holding of IME Group.
As source informed that National Life and IME Life Insurance are also in merger talk.
