Nepal Insurance Authority Mandates Significant Paid-Up Capital Boost for Reinsurance Companies

After the life insurance sector, reinsurance companies are now required to augment their paid-up capital. The Nepal Insurance Authority recently declared that reinsurance firms must undergo a twofold increase in paid-up capital, as determined during the board of directors' meeting on Wednesday.

Raju Raman Poudel, the authority's spokesperson, conveyed that the decision was made to maintain the reinsurance company's paid-up capital within the established limit of 20 Arba. This adjustment follows the enhancement of risk-bearing capacity in the life insurance sector, justifying the set limit of 20 Arba for reinsurance.

Nepal currently has two reinsurance entities, Nepal Reinsurance Company (government-owned) and Himalayan Reinsurance (privately owned), both mandated to elevate their paid-up capital to 20 Arba.

As of the financial statement until the end of Ashadh, Nepal Reinsurance Company's paid-up capital stands at 12 Arba 81 Crore rupees, while Himalayan Reinsurance has 10 Arba rupees. Consequently, the reinsurance company is expected to increase its paid-up capital by 56.1 percent, and Himalayan Reinsurance needs to undergo a 100 percent increment.

Previously, the authority stipulated a paid-up capital of 5 Arba for life insurance companies and 2.5 Arba rupees for non-life insurance companies.