Section 42: Assets to be maintained more than liabilities

1) The total assets of the insurer shall be more than the total liabilities.

2) For the purposes of sub-section (1), the solvency margin (ratio of total assets to total liabilities) of insurer shall be as prescribed by the Nepal Insurance Authority.

3) The insurers undertaking insurance business and branches of foreign insurers existing at the time of commencement of this act shall, within the time prescribed by the Nepal Insurance Authority, maintain the solvency margin as prescribed in sub-section (2).

4) For the purpose of this section, the valuation of total assets and total liabilities shall be as prescribed.