Insurance Authority Preparing to Extend Deadline for Capital Expansion of Reinsurance Companies by One Year

The Nepal Insurance Authority (NIA) is preparing to extend the deadline for reinsurance companies to meet the mandatory paid-up capital requirement by another year, after they failed to comply within the previously extended timeframe.

In February 2024, the NIA introduced a provision requiring reinsurance companies to maintain a minimum paid-up capital of Rs 20 billion, giving them one year to meet the requirement.

After the companies failed to reach the prescribed capital threshold by mid-February 2025, the NIA extended the deadline by one year until mid-February 2026.

Nepal has two operating reinsurance companies—Nepal Reinsurance Company and Himalayan Reinsurance Limited—both of which are required to maintain paid-up capital of Rs 20 billion.

Both companies had planned to raise capital through bonus shares and rights issues. However, the capital expansion plan of the government-owned Nepal Reinsurance Company has stalled after the government decided not to inject additional investment at this time.

Following significant damages during the Gen-Z movement on September 9, 2025, the government announced that it would not be able to make immediate additional investments. As a result, Nepal Reinsurance Company’s proposal to issue 100 percent rights shares has remained uncertain.

Shambhu Raj Lamichhane, head of the Regulation Department at the Nepal Insurance Authority, said a proposal has been submitted to the board of directors to extend the deadline by one year. He said the proposal was made considering the technical difficulties faced by the companies, with the expectation that they would meet the capital requirement under their existing plans.

He noted that Nepal Reinsurance Company’s rights issue would require additional government investment, which is currently not feasible. In the case of Himalayan Reinsurance, shareholders have already approved a proposal to issue 80 percent rights shares.

The annual general meeting of Himalayan Reinsurance held on March 3, 2024 endorsed the proposal to issue 80 percent rights shares to raise capital. However, the company has not yet submitted an application to the Securities Board of Nepal for approval.

Shishir Gaire, executive director of Himalayan Reinsurance, said the company has not been able to apply to the securities regulator because it has not yet received approval from the Nepal Insurance Authority to proceed with the rights issue.

“Although the company formulated a plan to meet the paid-up capital requirement within the stipulated period, delays in the approval process for the rights issue have caused setbacks,” Gaire said.

He added that any remaining shortfall after the rights issue would be covered through bonus shares.

Himalayan Reinsurance currently has paid-up capital of Rs 10.868 billion and requires an additional Rs 9.132 billion to meet the Rs 20 billion threshold set by the NIA. The company has yet to hold its annual general meeting for the last fiscal year and plans to mobilize part of the required amount through bonus shares from last year’s profits.

Nepal Reinsurance Company currently has paid-up capital of Rs 13.422 billion and needs an additional Rs 6.578 billion to meet the required threshold. The company has proposed issuing 100 percent rights shares to raise capital and had planned to increase its paid-up capital to over Rs 26 billion. However, uncertainty over additional government investment has put the plan in hold.