March 15: The Insurance Board Nepal has started preparations to establish four reinsurance companies by forming a committee to study about the prospects of new companies.

The board and the respective planners have initiated preparation to establish four re-insurance companies namely, Annapurna Reinsurance Company, Kathmandu Reinsurance Company, Prudential Reinsurance Company and Genuine Reinsurance Company.

Currently only one reinsurance company -- Nepal Reinsurance Company -- is in operation which is owned by the government.

Annapurna Reinsurance Company had started its preparation one year ago while other three companies initiated the process of establishment only recently. Previously, former finance minister Yuba Raj Khatiwada had been stressing on the need of a new reinsurance company. And some of the companies started planning of new reinsurance company immediately.

Sakar Law Firm has been involved in the process of setting up Annapurna Reinsurance Company. It has sent drafts of necessary documents, regulation bills to the investors.  As far as Prudential Reinsurance Company is concerned, Vishal Group and IME Group are investing on it.

CA Mahesh Guragain, Debendra Pratap Shah, Former President of Insurance Board, Ramesh Kumar Bhattarai , CEO of Mahalaxmi Life Insurance and Shree Chandra Bhattarai are the masterminds behind the process of establishing Kathmandu Reinsurance Company. Bhattarai said documents required to establish the company has already been prepared and pledges for the investment is also pouring in. “We are prepared to submit application as soon as the board calls for the application,” he said.

“The company will be established with the capital ranging from Rs 12 billion to Rs 15 billion. Individuals will own 30 percent shares, another 30 percent shares will be distributed to the public and the rest 40% percent share will be institutional investment,” Bhattarai said. Individuals have already pledged investment worth Rs 6 billion. The company is being established by experienced individuals so we are certain investment will be made from various sectors, he said.

Initially, Rs 10 billion capital was proposed to establish Kathmandu Reinsurance Company but its capital was raised later in view of standard international rating.

Shreeman Karki, former executive director of the board, and Rabindra Ghimire, insurance expert are planning the establishment of Genuine Reinsurance Company. The company will have a capital of Rs 10 billion. Of it, 30 percent will be institutional investment, 30 percent will be issued to private sector while 30 percent  will be issued to the public.

Rajumaran Poudel, Managing Director of Insurance Board, said study is underway whether the market needs another reinsurance company or not. To establish above-mentioned reinsurance companies, the Insurance Board needs to call for the application. After receiving approval from the board, a new company can be registered at the Company Registrar’s Office.  After having necessary infrastructure ready, the board will provide approval for the operation of the company.