A Nepali company has attracted reinsurance businesses from abroad, reflecting the trust it has been able to earn in less than a year since starting its operation in December 2014.

The Nepal Reinsurance Company Limited (NRCL), the country’s lone reinsurer, has signed contracts with two foreign insurance companies, one each from Bhutan and Afghanistan. The first agreement was signed in October 2015 and the other in November 2015, the company said. 

“Even though our credit rating has not been done, receiving business from foreign country is an important achievement for us,” said Chirayu Bhandari, chief executive officer of NRCL.

According to him, business was received from Bhutan Insurance Company and an insurer in Afghanistan. “We have received Rs15 million in premiums from the Bhutanese company,” said Bhandari. According to him, the amount is 5 percent of the total business of the Bhutanese company. 

Similarly, NRCL has received Rs10 million in premiums for reinsurance from the insurer in Afghanistan. Bhandari said the amount was equivalent to 7.5 percent of the business of the Afghan company. NRCL has covered risks related to marine, automobile and fire among others in the two countries.

“Due to the high terrorism risk in Afghanistan, we have not covered losses that could arise due to terrorism activities,” said Bhandari. “We conducted a three-year risk analysis before accepting premiums from the insurer.”

According to NRCL, it has also received proposals from Royal Bhutan Insurance Corporation and a number of insurers based in the Gulf countries including Iran and Iraq. Bhandari said the company had adopted a policy of expanding its business in the Saarc countries only in the beginning. 

Bhandari said they were planning to extend beyond Saarc countries after the beginning of the new fiscal year. “We have targeted to expand our business in other countries only after increasing the company’s capital base that will be accomplished through undistributed profits,” he said.  

The company’s paid-up capital stands at Rs2.1 billion. The government owns 43 percent of the company while 17 non-life insurers hold 39 percent of the shares and life insurers 18 percent of the shares.

The company said its business in the domestic market had also been expanding with a number of insurers signing reinsurance agreements with NRCL. According to the company, it has received premiums equivalent to 5 percent of the total non-life insurance business in the local market. “This amounts Rs500-550 million in total.”

NRCL said it had been reinsuring almost all types of insurance except those related to aviation and life. Bhandari said they planned to include life insurance too in the near future. He added that NRCL could reinsure 30 percent of the insurance business in the local market. 

The government had converted funds in the Insurance Pool into NRCL. It set up the Insurance Pool some 12 years ago to cover terrorism risks when the insurgency was at its peak. 

According to NRCL, it has been conducting retrocession transactions (reinsuring the reinsured risks) with Sava Reinsurance of Slovenia, General Insurance Corporation of India and Hannover Reinsurance of Germany.