Insurance Board hands over management to newly elected board of Everest Insurance

After Everest Insurance shareholders elected a new seven-member board of directors in the special general meeting today, the Insurance Board handed over the management to the elected body.

After takeover by the Insurance Board (IB) five months ago, the non-life insurance was managed by the Insurance Board team led by Santosh Prasain since October 10, 2013.

Sashi Agrawal, Rajan Kumar Poudel, Surendra Silwal, Niranjan Kumar Tibrewala, Pawan Kumar Shanghai, Arun Adhikari and Purusottam Raj Bhattarai were elected – out of the total 10 shareholders, who had filed their candidacy for the board members – by the shareholders.

The regulator of the insurance market took over the Everest Insurance after it stopped normal business activities. The regulator – in the first of such kind of move – had dissolved the board and suspended the chief executive officer before sending a three-member team headed by Prasain.

According to company, some 1,800 out of 3,404 claims have been cleared after the new management took charge of the company. The company also earned Rs 80 million profits within four months.

CIB nabs two auditors

In recent months, the auditors have been in news for all the wrong reasons, as they have been partners in financial crimes.

Central Investigation Bureau (CIB) arrested two auditors, who have been involved in auditing Everest Insurance accounts.

The CIB arrested CA Jagdish Agrawal of J Santosh and Company and CA Gopal Agrawal of G K Agrawal and Company from Kathmandu yesterday for their involvement in auditing the accounts of Everest Insurance in the fiscal year 2008-09, 2009-10, 2010-11 and 2011-12.

Everest Insurance former chief executive has been arrested by the CIB for embezzlement of the company fund of Rs 25.09 million for personal purpose, and the two auditors were found to have helped him misuse the company money, according to the CIB.

Likewise, the CIB has today arrested former director of NIDC Capital Market Shivaji Ray Yadav for his involvement in lending of the company fund for wrong purpose and people and helping misuse it.

Nepse suspends Everest Insurance share trading

Nepal Stock Exchange (Nepse) suspended the trading of shares of Everest Insurance today after the non-life insurance company threatened to shut down its operations.

Any price-sensitive news and information related to a public limited company have to be corresponded to the stock exchange and Securities Board of Nepal (Sebon) but the company chose to disregard the rule forcing the regulator to suspend its share trading, according to the Sebon. 

Everest Insurance announced that it was planning to shut its shop blaming the latest Corporate Governance Regulation-2069 introduced by the Insurance Board last month for drying up its business prospective and clipping its wings.

The regulation has not only forbidden a director of one insurance company — be it life or non-life — from holding position in another insurance company but also prohibited the company to sell policies to entities that has the involvement of the directors.

The non-life insurance company reasoned that by forbidding insuring the firms that has the involvement of their directors, the Insurance Board has dried up its business so they have decided to throw in the towel and close the company.

However, being a public limited company with shares floated to the public, Everest Insurance cannot shut down on the whims of its directors.
Promoted by Khetan Group Everest Insurance, with a market capitalisation of Rs 329 million, has more than one million units of ordinary shares held by minority shareholders.

Rajendra Khetan is the chairman of both Everest Insurance and the Himalayan Snax – which produces Mayos instant noodles – that get paid the insurance claim from Everest Insurance before the surveyor’s final report two weks ago, forcing the regulator Insurance Board to penalize it.

along with Prem Prakash Khetan, Ratan Lal Shanghai, Birendra K Shah, Madhu Sudhan Agrawal, Om Prakash Sikaria, Prasad Gyawali, Rabi K Tibrewala and Niranjan Tibrewala as board member in the company.

The regulator had suspended its fire insurance policies from August 28 after it was found to have haphazardly paid insurance claims while failing to pay the claims of the general public at the same time.

The regulator had also asked it to furnish appropriate explanation for its conduct or else get penalised. “The company is yet to formally inform the regulator regarding their plan to close down the company,” executive director of Insurance Board Binod Aryal said, adding that Everest Insurance is willfully trying to divert the attention of the regulator from its corporate governance issues, but shutting down will also not be easy for them.