India: Govt to pump $1.67bn in 3 state owned general insurers
Source: Asia Insurance Review | Oct 2019
Government owned general insurance companies — National Insurance, Oriental Insurance and United India Insurance — will be infused with funds totalling INR120bn ($1.67bn) to boost their capital base and meet regulatory requirements.
The Department of Financial Services has approved the INR120bn capital infusion plan for the three insurers, reported Indo Asian News Service.
In its budget announced in February last year, the government announced plans to merge these three insurance companies, and thereafter list the combined entity. However, the merger could not be completed due to various reasons, including the companies’ weak solvency positions.
The government will prepare a road map to improve the solvency ratios of the three unlisted state owned general insurers to at least the minimum required level of 150% before it drafts disinvestment plans for them.
“A road map has to be prepared first to bring their solvency ratio to the required level before merging the three. After the merger, if the solvency ratio meets the norm, disinvestment of the merged entity will be considered,” an official told Financial Express.
Industry sources say the government would have to infuse INR120-130bn in the three general insurers to improve their solvency ratio and prepare them for the merger. A