PSU insurers may get to tap capital markets
New India Assurance, National Insurance, Oriental Insurance and United India Insurance-may now be able to launch their IPOs.
By Rajeev Jayaswal, TNN |
NEW DELHI: Public sector general insurance companies—New India Assurance, National Insurance, Oriental Insurance and United India Insurance—may now be able to launch their IPOs. The government may allow them to raise money from the capital markets, which will consequently result in the dilution of government stake from 100%.
The finance ministry has accepted the proposal to allow nationalised general insurance companies to access the capital markets for meeting the required solvency margin ratio, government sources said.
It is understood that the government is not willing to infuse fresh capital into these companies due to paucity of funds, and wants them to raise capital from the market. Sources said the proposal was also discussed in a recent meeting of the group of ministers (GoM). The Insurance Regulatory and Development Authority (IRDA) has been requesting the government to infuse more capital into national insurance companies to bring their solvency margin to the required level of 1.5. The solvency margin of National Insurance Company is somewhere around 1.08, which is much less than the required norms. It has been observed in the GoM that the government must support the finance ministry’s proposal for raising capital from the market by general insurers to meet their capital needs.
The four insurance companies were converted into subsidiaries of General Insurance Corporation of India (GIC), a 100% government-promoted company, after the nationalisation of the insurance business in 1972. After the notification of the General Insurance Business (Nationalisation) Amendment Act, 2002, these subsidiaries were delinked from the holding company. Currently, they operate as government of India undertakings.
rajeev.jayaswal@timesgroup.com
The finance ministry has accepted the proposal to allow nationalised general insurance companies to access the capital markets for meeting the required solvency margin ratio, government sources said.
It is understood that the government is not willing to infuse fresh capital into these companies due to paucity of funds, and wants them to raise capital from the market. Sources said the proposal was also discussed in a recent meeting of the group of ministers (GoM). The Insurance Regulatory and Development Authority (IRDA) has been requesting the government to infuse more capital into national insurance companies to bring their solvency margin to the required level of 1.5. The solvency margin of National Insurance Company is somewhere around 1.08, which is much less than the required norms. It has been observed in the GoM that the government must support the finance ministry’s proposal for raising capital from the market by general insurers to meet their capital needs.
The four insurance companies were converted into subsidiaries of General Insurance Corporation of India (GIC), a 100% government-promoted company, after the nationalisation of the insurance business in 1972. After the notification of the General Insurance Business (Nationalisation) Amendment Act, 2002, these subsidiaries were delinked from the holding company. Currently, they operate as government of India undertakings.
rajeev.jayaswal@timesgroup.com
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