After Failure to Merge with Prabhu Insurance, Ajod Insurance Inks Merger Deal With United Insurance

A merger agreement has been signed between the two non-life insurance - Ajod Insurance Limited (AIL) and United Insurance Company (Nepal) Limited (UIC).

The agreement was signed by Rabindra Raj Pant, director of United Insurance and Chiranjeevi Dawa, director of Ajod Insurance.

As per the initial merger agreement, it has been agreed that the swap ratio between UIC and AIL will be 100:90, implying that the number of shares of AIL shareholders will decrease by 10% in the newly merged company. Likewise, the name of the company formed after such merger has been fixed to be United Ajod Insurance.

On the other hand, Ajod Insurance and Prabhu Insurance Company Limited (PRIN) had approved the draft agreement of Memorandum of Understanding (MoU) regarding the merger and the MoU was signed on 32 Ashad, 2079. However, the merger agreement has been breached and now AIL has signed an agreement to merge with UIC.

According to the source, the merger of AIL with PRIN has broken because of disagreement in the swap ratio.

Since the Insurance Regulatory Authority Committee issued a directive to increase the capital within a year, many insurance companies merged this year. The committee has set a minimum capital of Rs 2.5 Arba for non-life insurance companies. Further stating that this limit should be reached by Chaitra 2079.

The insurance committee has also instructed not to give priority to the issue of right shares for capital increase. It is visible that the committee has attempted to lessen the range by forcing the Insurance companies to head for the merger, directing them to elevate the desired capital without issuing the right shares.

The present share capital of AIL and UIC is Rs. 1 Arba and Rs. 1.07 Arba respectively. Likewise, the Last Trading Price (LTP) of these companies is Rs. 559 and Rs. 475.