Kathmandu. Life insurance companies have invested Rs 54.03 billion in the stock market in the first three months of the current FY.

Insurance companies have invested Rs 37.71 billion in ordinary shares of listed public companies and Rs 16.32 billion in other promoter shares.

According to the Insurance Authority, 13 insurance companies have invested Rs 37.71 billion in the first three months of the current fiscal year. However, Met Life Insurance Company has not invested in the shares of the listed company during this period.

Himalayan Life Insurance Company has invested the most in the shares of the listed company during the three months period, while National Life Insurance Company has invested the least in the shares of the listed company.

Similarly, Himalayan Life Insurance has invested Rs 11.39 billion while Life Insurance Company has invested Rs 20.64 crore.

According to NEA, Nepal Life Insurance Company is the second company to invest the most. The company has invested Rs 6.33 billion. Surya Jyoti Life Insurance has invested Rs 3.88 billion in the current fiscal year.

According to NEA, 11 insurance companies have invested Rs 16.32 billion in promoter shares of the bank. However, Sanima Reliance Life, Citizens Life and MetLife Insurance have not invested in the promoter shares of banks and financial institutions.

Some companies have been hesitant to invest in promoter shares as the bank’s returns have been decreasing in recent times. The average return on investment (ROE) of commercial banks in the first three months of the current fiscal year stood at 6.40 percent.

As the ROE decreases, big shareholders are exiting the bank. Insurance companies used to keep a large part of their shares in fixed deposits of banks and financial institutions. Currently, commercial banks are offering less than 3 percent interest on institutional fixed deposits.

Earlier, banks used to offer 1 percent lower interest rate on institutional deposits than on individual deposits. Nepal Rastra Bank (NRB) has reduced the monetary policy by 1 percent in the review of the first quarter of the current fiscal year. Even after removing it, the interest earned by the promoter depositors will not be even 4 percent. Insurance companies, which are hit by falling bank interest rates, do not get much profit even after buying promoter shares. However, some insurance companies have made good investments.

Asian Life Insurance has invested the highest amount of Rs 3.94 billion in the bank’s promoter shares. IME Life has the lowest turnover of Rs 15.81 crore. Nepal Life Insurance Company is the second company to invest the most in the promoter shares of the bank. Nepal Life Insurance has invested Rs 3.03 billion.

Similarly, National Life Insurance Company has invested Rs 2.83 billion and National Life Insurance has invested Rs 2.10 billion.

The life insurance companies can invest up to 15 percent of the paid-up capital of a listed company in promoter or ordinary shares. NEA has made this provision by issuing the Insurer’s Investment Directive 2082. The companies have invested in accordance with this provision.

During the review period, insurance companies invested Rs 71.01 billion in preferential shares, bonds, debentures and debentures of banks and financial institutions, Rs 11.27 billion in bonds, debentures and debentures of listed public companies and Rs 2.73 billion in shares of investment companies.