Asian Life Insurance Invests in Founder-Linked Hotel Company, Violating Insurance Act

Asian Life Insurance has been found investing in City Hotels Limited, a company largely owned by its own founder shareholder Shaktikumar Goyal, in a clear conflict of interest and against the Insurance Act 2079. The company purchased 2 million shares of City Hotels through auction bidding. Goyal holds 5.31% shares in Asian Life and 26% ownership in City Hotels, where he also serves as Chairman.

The Insurance Act strictly prohibits insurers from doing business or investing in companies where their directors or major shareholders (those holding more than 1%) have financial interests. Officials from the Insurance Authority have termed this move a direct violation of the law.

Asian Life acquired 1 million shares at Rs. 306, 900,000 shares at Rs. 276, and 100,000 ordinary shares at Rs. 480 each. The company claims it opted for this investment due to banks refusing to renew fixed deposits and offering very low interest rates.

City Hotels, operating the Hyatt Centric five-star hotel in Tahachal, has been facing financial difficulties. To raise capital, it auctioned 2.15 million unsold rights shares, which helped the company collect over Rs. 215 million in paid-up capital and Rs. 468.6 million in share premium.

This controversial investment by Asian Life has raised serious legal and regulatory concerns within Nepal’s insurance sector.