Budget 2016: Government plans to list four public sector general insurance firms

MUMBAI: Investors will probably have something new to add to their portfolio soon, not a flashy startup, but ancient general insurance firms which until now have been privately held.

The finance minister has proposed to list four general insurers, adding spice to a market that has been bereft of new themes and establishing a benchmark for private firms that would list later.

IPOs of New India Assurance or National Insurance could breathe new life into a market which has seen issues such as Coffee Day Enterprises, Prabhat Dairy, and Quick Heal, where investors have lost money.

Investors who have been cold to some of the share offerings from the government stable, could find these insurers a novel business and may rush to buy them.

Also, they would hope to make profits since the pricing could be a lot more reasonable than the ones from the private sector.

Jaitley said public listing of general insurance companies is among the major reforms that the government intends to do.

“PSU insurers are fairly ready for listing shares,” G Srinivasan, CMD of New India Assurance told ET. “If market conditions are good, we can consider listing in 2016-17 itself.”

The Insurance Laws (Amendment) Act 2015 enables the government to dilute equity stakes in PSU insurance companies by up to 51% to “raise capital, keeping in view the need for expansion of the business”.

“There is a lot of embedded value in public sector insurers given the brand and trust it enjoys from public,” K Sanath Kumar, MD of National Insurance Company told ET. But, huge underwriting losses goes against their valuation, he said.