Nepal Reinsurance Company Limited (NRCL) plans to increase transactions with Indian and other foreign insurance companies after strengthening its capital base. The company, which is currently preparing to boost its paid-up capital, wishes to diversify its business portfolio and enter new areas including the aviation sector.

Recently, NRCL received approval from the Insurance Regulatory and Development Authority of India to reinsure the policies of Indian insurance companies. Of the total insurance portfolio of Rs4 billion, NRCL has received business worth Rs500 million from Indian insurers.

NRCL Chief Executive Officer Chirayu Bhandari said they aimed to expand business with Indian insurance companies to Rs2 billion from the existing Rs500 million in the next fiscal year. Currently, NRCL reinsures the insurance policies of six Indian insurers.

NRCL has a paid-up capital of Rs5 billion. It is now in the process of making a Rs1.28 billion initial public offering (IPO) to increase its capital base to Rs8 billion. The company has allotted 16 percent of its shares at Rs100 apiece to the general people.

As per the budget statement for 2018-19, the government has asked Nepali insurers to reinsure at least 20 percent of their policies with domestic reinsurance companies. This is expected to help NRCL expand its business in the domestic market.

The company reinsures marine, automobile, fire and engineering insurance policies. Bhandari said they would start reinsuring aviation insurance policies in the near future.  

According to him, NRCL currently reinsures the policies of insurers in 28 countries. Apart from Indian insurers, it has dealings with insurance companies in the Maldives, Bahrain, Pakistan, the Philippines and a number of African countries. Most of the policies reinsured are fire, assets and engineering policies. The government established NRCL in November 2014 in a bid to stem the flow of money going out of the country in reinsurance premiums. It replaced the Insurance Pool that was set up in 2003 with a 50 percent equity participation of the government and the rest of insurance companies, mainly non-life companies, to insure terrorism risk.