Government Mulls Various Options For Consolidation Of PSU General Insurers - The Economic Times On Mobile Insurance psu Merger

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NEW DELHI: The executive is exploring various consolidation options including merger about state-owned accepted assurance companies with New India Assurance with a view to create synergy and unlock value.

The Department about Investment and Public Asset Management (DIPAM) under the Ministry about Finance is also looking at other options including stake sale in three state-owned assurance firms like National Insurance Company, Oriental Insurance Company and United India Insurance Company, sources said.

The idea is to fast path stake sale in the public part accepted assurance companies, which has been pending for the past two years, sources said.

Various options including issuance about fresh shares which could be subscribed by New India Assurance are also being explored, they said, adding that direct sale about stake to New India is also in the consideration.

Another option being considered is to combine all the four companies, instead about the proposed three, to create an LIC-type mega insurer in the accepted assurance space and avoid undercutting each other. Once the merger is complete, the executive will go for a dilution about its stake in the broader entity.

The executive had appointed E&Y as a consultant to see through the completion about the merger process.

The consolidation in the public part accepted assurance companies is part about disinvestment strategy about the government.

In 2017, state-owned New India Assurance Company and General Insurance Corporation about India were listed on the bourses and exchequer earned money out about stake sale.

The executive has inflexible disinvestment target about Rs 90,000 crore for the current fiscal as against Rs 85,045 crore in the previous fiscal.

It is to be noted that the government, in the Budget 2018-19, had proposed to combine National Insurance Company, Oriental Insurance Company and United India Insurance Company.

The Centre in the Budget had announced that the three companies would be merged into a single assurance entity.

The process about merger could not be completed due to various reasons, including poor financial health about these companies.

The two about these public part companies are struggling to maintain the solvency ratio. As against the assurance regulator Insurance Regulatory and Development Authority's (IRDA) solvency ratio norm about 1.5, National Insurance has an insolvency ratio about 1.5, while United India's level is comparatively lower at 1.21.

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