September 14: Life insurance companies have started investing in real estate business and infrastructure soon after they were given permission to invest in these sectors.
Issuing the ‘Insurer’s Investment Guideline, 2075’, the Insurance Board has made arrangement to allow companies to make capital or loan investment in real estate business and construction of infrastructure such as agriculture, tourism and water resources.
There are currently 19 life insurance companies operating in Nepal. By the end of the last Fiscal Year (FY), they have invested Rs 284.67 billion in deposits of Bank and Financial Institution.
The life insurance companies can invest in various funds including life insurance funds. However, they must have enough money to pay immediately. According to the Insurance Board, as of last July, life insurance companies have invested Rs 362.4 million in real estate business.
Companies will be able to invest a maximum of 5 percent of their reserve capital in real estate.
Similarly, the companies have invested Rs 7.66 billion in sectors like agriculture, tourism and water resources. There is an arrangement to invest maximum 20 percent of the reserve capital in the field of infrastructure construction. Earlier, only 5 percent of the maximum amount could be invested in such areas. The companies say that they are increasing their investment in the field of infrastructure construction after the limit has been increased.
According to the investment guideline, the insurance companies can invest in bank deposits, bank shares, ordinary shares of listed companies, debentures of public companies, government bonds, mutual funds, real estate, infrastructure construction and other sectors. Insurance companies have been open to invest in debentures since 2075. Since then, life insurance companies have invested Rs 5 billion in debentures.