Advertisement
The Department of Investment and Public Asset Management (DIPAM) under the Ministry of Finance is also looking at other options including stake sale in three state-owned insurance firms like National Insurance Company, Oriental Insurance Company and United India Insurance Company, sources said.
The idea is to fast track stake sale in the public sector general insurance companies, which has been pending for the past two years, sources said.
Various options including issuance of fresh shares which could be subscribed by New India Assurance are also being explored, they said, adding that direct sale of stake to New India is also in the consideration.
Related Articles
Advertisement
The government had appointed E&Y as a consultant to see through the completion of the merger process.
The consolidation in the public sector general insurance companies is part of disinvestment strategy of the government.
In 2017, state-owned New India Assurance Company and General Insurance Corporation of India were listed on the bourses and exchequer earned money out of stake sale.
The government has fixed disinvestment target of 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 merge 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 insurance entity.
The process of merger could not be completed due to various reasons, including poor financial health of these companies.
The two of these public sector companies are struggling to maintain the solvency ratio. As against the insurance regulator Insurance Regulatory and Development Authority’s (IRDA) solvency ratio norm of 1.5, National Insurance has an insolvency ratio of 1.5, while United India’s level is comparatively lower at 1.21.