Nepal Reinsurance Company has referred to the Securities Board of Nepal to trade Rs1.6 billion value of stock in a primary public offering.
The country’s only reinsurance firm intends to increase its paid-up capital to Rs10 billion from the current Rs8.40 billion with the primary public offering.
“As part of the final process to issue shares to the public, we registered an application at the board on Sunday,” stated Damodar Bhandari, officiating chief executive officer of the company.
As per the board, the reinsurer has implemented to issue 16,000,000 units of primitive shares. The company has elected RBB Merchant Banking as issue manager.
The reinsurer told it proceeded to perform the primary public offering following the government allowed to increase its stake in Nepal Reinsurance Company to 44.03 percent from the current 43.55 percent.
The company has an approved capital of Rs15 billion and an allotted capital of Rs10 billion.
The reinsurer has received a credit rating of ICRANP IPO Grade 2 for its public offering from ICRA Nepal. The credit rating shows above-average fundamentals of equity shares of the company, according to ICRA Nepal.
The reinsurer began operations in November 2014. The company’s establishment has helped to check the outflow of a huge amount of funds in insurance premiums paid by domestic insurance companies to foreign reinsurers.
The government made it compulsory for Nepali insurers to reinsure at least 20 percent of their policies with domestic reinsurance firms in the budget report for fiscal 2018-19.
In 2003, the government set up the Insurance Pool aiming to prevent money from going out of the nation in reinsurance premiums, which was later transformed into Nepal Reinsurance Company.
In the last fiscal year, the company made a net profit of Rs1.18 billion out of which 84 percent was from non-life insurance businesses. The company made an exclusive profit of Rs1.01 billion in fiscal 2017-18.
As of mid-July, it had raised premiums worth Rs5.53 billion, along with Rs2 billion in the last fiscal year.
Of the total premium expense, it managed Rs5.12 billion from non-life insurance firms and the rest from life insurance businesses.