Industry

Budget may provide ₹4,000-cr capital infusion for PSU general insurers

Representational image.  

The upcoming Budget may have a provision for ₹4,000-crore capital infusion for the public sector general insurance companies to shore up their capital. According to sources, the Department of Financial Services had sought ₹4,000 crore in the Budget for fund infusion into National Insurance Company, Oriental Insurance Company and United India Insurance Company. Depending on the capital that Budget provides, individual allocation would be made, sources added.

This capital is required to strengthen their financial health.

The profitability of many general insurance firms had been under pressure due to rising underwriting losses and higher claims.

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

Finance Minister Arun Jaitley in the Budget speech had announced that the three companies would be merged into a single insurance entity. The process of merger is likely to be completed during the current fiscal.

As on March 31, 2017, the three companies together had more than 200 insurance products with a total premium of ₹41,461 crore and a market share of around 35%.

Their combined net worth is ₹9,243 crore, with total employee strength of around 44,000 spread over 6,000 offices.

In 2017, state-owned New India Assurance Company and General Insurance Corporation of India were listed on bourses.

Initial estimates suggest that the combined entity formed by merging the three insurers will be the largest non-life insurance company in India, valued at ₹1.2-1.5 lakh crore.

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Printable version | Nov 29, 2020 11:34:58 PM | https://www.thehindu.com/business/Industry/budget-may-provide-4000-cr-capital-infusion-for-psu-general-insurers/article26105537.ece

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