Final Merger Agreement Between United Insurance & Ajod Insurance Completed; Combined Business To Operate In The Name of 'United Ajod Insurance'

The final merger agreement between United Insurance Company (Nepal) Limited (UIC) and Ajod Insurance Limited (AIL) has been completed and passed.

The final agreement between the companies was signed by the Chairman of the Board of Directors of United Insurance, Mr. Ravi Bhakta Shrestha, and Mr. Azad Shrestha on behalf of Ajod Insurance Limited.

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 the merger has been fixed to be United Ajod Insurance.

Previously, Ajod Insurance and Prabhu Insurance Company Limited (PRIN) had approved the draft agreement of the Memorandum of Understanding (MoU) regarding the merger and the MoU was signed on 32 Ashad, 2079. However, the merger of AIL with PRIN was canceled because of a 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. 466 and Rs. 438.