Kathmandu: Nepal Insurance Authority (NIA) has concluded that the directors of Himalayan Reinsurance exploited public funds held within the company to artificially inflate the share prices of their own business group’s subsidiaries and to manage internal capital requirements.
This revelation follows an emergency audit and on-site inspection conducted by the regulator at both Himalayan Reinsurance and Nepal Micro Insurance. The investigation uncovered systemic breaches of corporate governance and the misappropriation of billions of rupees, raising grave concerns regarding the financial integrity of the country’s insurance sector.
At the heart of the scandal is an opaque and suspicious financial relationship between these two insurance firms and Bhrikuti Stock Broking (Broker No. 55). According to the inspection report, Himalayan Reinsurance has an outstanding balance of over Rs 2.73 billion from share trading through this broker.
The regulator found it highly irregular that, despite such massive outstanding amounts, the company continued to funnel hundreds of millions in additional “advances” to the broker’s account. Between February and May 2025, the insurance company repeatedly transferred sums ranging from Rs 70 million to Rs 120 million to the broker while billions remained unrecovered, suggesting a coordinated effort to divert insurance funds for unauthorized external operations.
Furthermore, the audit revealed a systematic violation of investment thresholds. While reinsurance companies are legally restricted from investing more than 15 percent of their total funds in listed shares, a cap that was as low as 10 percent prior to August 2025, Himalayan Reinsurance’s exposure reached a staggering 23.61 percent.
The report highlights that in the final week of June 2025, the company used unsettled funds held by the broker to purchase over a million shares of Guardian Micro Life Insurance without obtaining the mandatory prior approval from the NIA. The investigation notes that several major shareholders are common across these entities, confirming that public money was exploited to support the capital management of the directors’ broader business interests.
A similar pattern of misconduct was identified at Nepal Micro Insurance, which invested 31.86 percent of its total funds in Nepal Reinsurance shares, despite a strict 10 percent regulatory ceiling. The company also has nearly Rs 162 million stuck as an advance with Bhrikuti Stock Broking, an amount that has been outstanding since November 2025.
Rather than pursuing legal action or formal written communication to recover these funds, the management reportedly relied on “verbal requests,” a move the regulator interprets as a calculated delay to allow the funds to be utilized for personal or group-wide financial gains.
Nepal Insurance Authority has labelled these activities as a pre-planned scheme executed with malicious intent. The regulator pointed out that even though investment limits were breached as early as July 2024, the continued payments to the broker indicate bad faith on the part of the management.
The report explicitly accuses the Investment Subcommittee and the Board of Directors of turning a blind eye to these suspicious transactions.
Consequently, the NIA has recommended severe action against the Board members, the Investment Subcommittee, and the Chief Executive Officer under Section 140 of the Insurance Act, 2022, characterizing the case as a serious financial crime. The regulator has further suggested a comprehensive investigation into potential money laundering and financial irregularities, citing the dangerous precedent of holding public funds in broker accounts to facilitate self-dealing.
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