18th September 2025, Kathmandu
IGI Prudential Insurance Company is facing a significant challenge after receiving 24 separate claims totaling over NPR 1.59 billion due to property damage and losses incurred during recent protests.
IGI Prudential’s Share Price Decline
IGI Prudential Insurance Company is facing a significant challenge after receiving 24 separate claims totaling over NPR 1.59 billion due to property damage and losses incurred during recent protests. This surge in claims has severely impacted the company’s financial outlook, leading to a dramatic decline in its share value and raising concerns about its short-term liquidity and ability to maintain dividend distributions.
The Impact on Share Price
The news of the massive claims had an immediate and severe effect on the company’s share price on the Nepal Stock Exchange (NEPSE). On Thursday, trading in IGI Prudential’s shares was halted just four minutes after the market opened, as the stock hit its negative circuit breaker. The price plunged by NPR 51.42 per share, closing at NPR 463, its lowest level in months. The trading volume was extremely low, with only 722 shares changing hands, which highlights how quickly liquidity dried up as investors rushed to sell.
This sharp decline was a clear signal of the market’s anxiety and loss of confidence in the company’s financial stability.
Financial and Market Implications
The large volume of claims has unsettled investors, who fear that IGI Prudential’s capital adequacy ratio and short-term profitability will be negatively impacted. While insurance companies typically use reinsurance to mitigate large losses, the scale and suddenness of these claims could still pose a significant challenge. Reinsurance is a mechanism where an insurance company (the ceding company) transfers some of its risk to another insurer (the reinsurer). This is a standard practice for managing exposure to catastrophic risks like civil unrest. However, the sheer size of the claims, which are estimated to be several times larger than those from the 2015 earthquake, suggests that even with reinsurance, the company’s financial position will be under considerable pressure. Some brokerage houses have advised a “wait-and-see” approach until the company provides more details on its reinsurance coverage and its plans for claim settlement. This uncertainty has led many shareholders to sell, even at a loss, to avoid further price drops.
The incident is also causing wider market unease. With the NEPSE index already trending downwards due to broader macroeconomic challenges, the news about IGI Prudential has added a new layer of uncertainty. Investors are concerned that other insurers may also receive similar claims, which could trigger a downward spiral for the entire insurance sector. The Nepal Insurance Authority (NIA) has already instructed insurance companies to promptly and easily settle claims arising from the protests, indicating that this is a systemic issue affecting multiple players in the industry. For example, Bhatbhateni Supermarket, a major retail chain, has reportedly filed an insurance claim of over NPR 2.5 billion with IGI Prudential alone.
Future Outlook and Corporate Response
IGI Prudential Insurance Company has not yet released a detailed public statement outlining how it plans to handle the influx of claims. Market watchers are eagerly awaiting the company’s upcoming quarterly report, which is expected to disclose its reinsurance coverage, loss-reserve adjustments, and other contingency plans. The lack of immediate communication from the company has likely contributed to the heightened investor anxiety and market volatility. Until more information is provided, market analysts predict that the company’s stock will remain volatile and that a quick rebound is unlikely. The situation serves as a stark reminder of the inherent risks in the insurance sector, where unforeseen large-scale events can dramatically alter a company’s financial trajectory and investor confidence. The broader market will be watching closely to see how both IGI Prudential and the insurance sector as a whole navigate this unprecedented challenge.
For More: IGI Prudential’s Share Price Decline