The proposed merger of the three state-owned general insurance firms will happen only in the next fiscal, said two government officials aware of the developments.
“We will further bring down the losses before setting up a combined entity,” said one of the officials.
The government had announced merger of National Insurance Company, United India Insurance Company and Oriental India Insurance Company in the Budget 2018.
The government has now directed these firms to make their operations more efficient and low cost, while the companies are also looking at monetising their assets including real estate to raise revenues, the official said.
The other official said the government is also looking at issues such as the need for a review of the HR practices across the three firms. “Right now there are no synergies,” the official said. “Any merger will further impact the commercial interest of these insurers.”
The government had plans to list the merged entity. In 2017-18, it had listed National Insurance and General Insurance Company, divesting 11.65% and 12.5% stakes, respectively, in the two companies.
An executive at Oriental India Insurance said that the government is also expected to infuse some capital to help these companies.
In quarter ended September last year, the three insurers had posted a combined loss of around ?1,800 crore.
“The market share of all the public sector general insurance companies has also come down,” the Oriental Insurance executive said.
Oriental had posted a loss of Rs 240 crore in the second quarter of this fiscal, against a profit of Rs 200 crore in the quarter ended September 2017. As per latest data from Insurance Regulatory and Development Authority of India (IRDAI), market share of National Insurance Company for gross direct premium till December 2018 fell by 9.52% to 8.63%.
United India Insurance share also came down by around 4.88%. Last year, the government had initiated a six-point reform agenda for general insurers which included sustainable and prudent business, talent management and customer orientation.
Financial services secretary Rajiv Kumar in a tweet said, “Aim is to develop comprehensive reform agenda in six themes to modernise public sector GICs. Committed to work towards safety net of all citizens.”
Source : PTI