The government may consider injecting capital to the three state owned non-life insurers in India, after international professional services firm Ernst & Young (EY) presents its restructuring proposal, sources in the Finance Ministry have said.
EY has been appointed to advise on restructuring and merger of the three general insurers which are National Insurance, Oriental Insurance and United India Insurance.
The amount of additional capital would be worked out after EY gives its report, though sources with the Department of Investment and Public Asset Management, which is part of the Finance Ministry, said that anywhere between INR90bn ($1.3bn) and INR100bn would be required to restore the solvency position of the insurers, reported Business Standard.
In a presentation to the Finance Ministry last year, the three companies had stated a collective recapitalisation need of between INR90bn and INR150bn.
The government's original plan was to merge the three entities and then to list the merged company on the stock exchange.
"The aim is to strengthen the insurance entities and push for consolidation by bringing more focus into their operations. The next step would be decided soon with action being taken in the current fiscal year itself. Capital support would be the initial target," said a government source privy to the development.
Mrs Nirmala Sitharaman, Finance Minister, was silent on the issue of recapitalisation of the three state owned general insurers in her Budget address delivered last Friday.