NIC, OIC plan IPOs to fund overseas operations
Two leading public sector general insurers may explore the IPO route to raise fresh resources.
By TNN |
KOLKATA: Two leading public sector general insurers may explore the IPO route to raise fresh resources. For starters, Oriental Insurance (OIC) is keen to come out with an IPO while National Insurance (NIC) is interested, but may not do so immediately. Even if allowed by the government, NIC may wait till it has reported underwriting profits.
The Centre did indicate that public sector general insurers might be allowed to raise funds through the IPO route. But that would, however, require a change in the Insurance Act and a clear direction from the finance ministry to insurance companies, which is yet to come. The government holds 100% in all four public sector general insurance companies, including NIC and OIC.
M Ramadoss, chairman and managing director, Oriental Insurance, said: “The IPO will enable us to take up investments for opening foreign representative offices, set up a large number of rural branches to undertake rural insurance and even expand reach in urban areas. At present, we are constrained because we cannot undertake these investments from policyholders’ funds. These investments are allowed only with shareholders’ funds.”
He was speaking to reporters on the sidelines of the Insurance Conclave 2007, organised by Ficci on Wednesday.Elaborating, he said: “A share of face value Rs 10 may fetch about Rs 670 in the market, if we considered it on investment market value.
This is just a very rough estimate and we may be able to fetch more.” V Ramasaamy, NIC chairman and managing director, who was also present at the Conclave, said: “We may wait to first make underwriting profits before going for an IPO. Nevertheless, this is just at the proposal stage and we are yet to receive direction from the Centre.” In a parallel development, OIC has entered into talks with Life Insurance Corporation of India (LIC) for designing a micro-insurance policy that will offer both life and general insurance covers. “We are talking to a few private life insurance companies as well as LIC,” said Mr Ramadoss.
The Centre did indicate that public sector general insurers might be allowed to raise funds through the IPO route. But that would, however, require a change in the Insurance Act and a clear direction from the finance ministry to insurance companies, which is yet to come. The government holds 100% in all four public sector general insurance companies, including NIC and OIC.
M Ramadoss, chairman and managing director, Oriental Insurance, said: “The IPO will enable us to take up investments for opening foreign representative offices, set up a large number of rural branches to undertake rural insurance and even expand reach in urban areas. At present, we are constrained because we cannot undertake these investments from policyholders’ funds. These investments are allowed only with shareholders’ funds.”
He was speaking to reporters on the sidelines of the Insurance Conclave 2007, organised by Ficci on Wednesday.Elaborating, he said: “A share of face value Rs 10 may fetch about Rs 670 in the market, if we considered it on investment market value.
This is just a very rough estimate and we may be able to fetch more.” V Ramasaamy, NIC chairman and managing director, who was also present at the Conclave, said: “We may wait to first make underwriting profits before going for an IPO. Nevertheless, this is just at the proposal stage and we are yet to receive direction from the Centre.” In a parallel development, OIC has entered into talks with Life Insurance Corporation of India (LIC) for designing a micro-insurance policy that will offer both life and general insurance covers. “We are talking to a few private life insurance companies as well as LIC,” said Mr Ramadoss.
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