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After LIC, India Mulls Stake Sale In A General Insurer -- Exclusive

National Insurance Co., Oriental India Insurance Co. and United India Insurance are the three unlisted state-run general insurers.

<div class="paragraphs"><p>Slice of quiche. (Photo:&nbsp;Timothy Muza/Unsplash)</p></div>
Slice of quiche. (Photo: Timothy Muza/Unsplash)

India is considering privatising a general insurer after the listing of Life Insurance Corp. of India, according to two government officials.

The NITI Aayog has suggested the name of United India Insurance Co., one of the officials quoted above told BQ Prime. The discussions are in the final stages. A core group of secretaries on disinvestment was formed to look into the matter.

They will be sending a final name to a group of ministers. It’s expected that the process will begin after the first quarter of the ongoing financial year, the officials said on the condition of anonymity as they are not authorised to speak to the media.

National Insurance Co., Oriental India Insurance Co. and United India Insurance are the three unlisted state-run general insurers.

United India Insurance is being considered because it has the highest number of regional offices across the country and has displayed healthy results in the past, said the official quoted above.

United India has more than 2,100 offices, while Oriental Insurance and National Insurance have over 1,800 and 1,700 offices, respectively, according to their websites.

In August last year, the Lok Sabha passed the General Insurance Business (Nationalisation) Amendment Bill that allows the government to sell its stake in insurance corporations. This was preceded by Finance Minister Nirmala Sitharaman’s Union Budget 2021 announcement about privatisation of two public sector banks and one general insurance company in 2021-22.

The second government official cited earlier listed the measures taken by the central government to make insurance companies a lucrative buy for private firms. To aid the financial health of general insurers, recapitalisation of up to Rs 5,000 crore was approved by parliament in March through the third batch of supplementary demand for grants, the official said. The insurers have also floated a request for proposal to hire an external consultant for profitable growth.

BQ Prime’s emailed queries to the Department of Financial Services and the Department of Investment and Public Asset Management remained unanswered.

In March 2022, the government allotted Rs 3,700 crore for National Insurance, Rs 1,200 crore for Oriental Insurance and Rs 100 crore for United India Insurance. In July 2020, the Union cabinet had approved a capital infusion of Rs 12,450 crore in the three general insurance companies.

Also, according to the insurance regulator, insurers are mandated to maintain a surplus of 1.5 times the liabilities at all times. This translates to a solvency ratio of 150%. But as of December, solvency ratios of Oriental Insurance, National Insurance and United India Insurance stood at 15%, 9% and 72%, respectively.