Earlier, Ajod and Prabhu Insurance had signed a merger agreement in the last week of July 2022. However, the proposed merger did not materialize as both companies could not agree on the swap ratio.
Ajod entered into a merger agreement with United after the regulatory body Nepal Insurance Authority agreed to end the merger process with Prabhu Insurance. During the signing of the agreement, both companies had agreed to merge with a swap ratio of 100:70. But, later Prabhu proposed a 100:60 swap ratio. The merger momentum in the Nepali insurance sector has intensified in the last one year after the Nepal Insurance Authority increased the minimum paid-up capital requirements of both life-insurance companies and non-life insurance companies. The authority has increased the paid-up capital of non-life insurance companies to Rs 2 billion while it is Rs 5 billion for life insurance companies. The authority has been pushing for consolidation in the Nepali insurance sector since the new chairman Surya Silwal took charge of the authority. There have been two successful mergers in the non-life insurance business in 2022. In July, Himalayan General Insurance and Everest Insurance merged to form Himalayan Everest Insurance Co. Ltd. Similarly, in October, Sanima General Insurance and General Insurance Company merged to form Sanima GIC Insurance Ltd. And, the first merger in the Nepali life insurance sector took place on December 22 with Surya Life Insurance and Jyoti Life Insurance starting an integrated business as Suryajyoti Life Insurance Company. This is the first merger among the life insurance companies in the country. While other life insurance companies have also signed merger agreements, they are yet to complete the merger process.
