May 6: Himalayan General Insurance Company Limited and Everest Insurance Company Limited have agreed for a merger under indirect pressure from the Insurance Board to raise their paid-up capital.

A Memorandum of Understanding (MoU) to this effect was signed by chairman of Everest Insurance Rajiv Sapkota and Mahendra Krishna Shrestha on behalf of Himalayan General INsurance. 

A six-member merger committee representing three directors of each company has been formed to take the merger process forward. 

“The merger committee will now decide on everything from asset liability assessment to determining the swap ratio in order to restructure of the company after the merger,” said Kamal Gautam, CEO of Everest Insurance, “Then we will merge with each other. As we merge with each other, the name of the company will be kept in such a way that it will reflect the identities of both the companies.” 

According to him, the target is to do integrated business within the current fiscal year. “We will now proceed with the necessary process after getting approval in principle from the board. Overall, our initial goal is to start integrated business within the current fiscal year,” he said, “Our goal is to become the first company to merge in the insurance sector.” 

The Insurance Board had issued a directive a month ago instructing the insurance companies to increase their paid-up capital. At present, non-life insurance companies should have a minimum paid-up capital of Rs 1 billion and life insurance companies should have a minimum paid-up capital of Rs 2 billion.  

The board has directed that the non-life insurance companies should raise the minimum limit of paid-up capital to Rs 2.5 billion and life insurance companies should increase it to Rs 5 billion by mid-April 2023.