Finance Minister Nirmala Sitharaman may announce second-round capital extract for public sector general insurance companies in the upcoming Budget to boost their financial wellbeing.
The authorities infused per cent two,500 crore from the three insurance companies — National Insurance, Oriental Insurance and United India Insurance — during initial supplementary demands for grants for 2019-20 previous month.
Nonetheless, these businesses would call for extra Rs 10,000-12,000 crore funding dose to satisfy the prescribed solvency margin, sources said.
The sources further stated that statement to this impact can be earned in the Budget 2020-21 which is scheduled on February 1.
Infusion is not only going to enhance their fiscal wellbeing but ease merger announced in the Budget 2018-19.
From the Budget 2018-19 address, then Finance Minister Arun Jaitley had announced that both companies would be merged into one insurance entity.
On the other hand, the practice of merger couldn’t be done due to different reasons, such as poor fiscal health of those businesses. According to the sources, following the merger, the combined entity will be recorded on the bourses.
Initial estimates indicate that the joint entity formed by consolidating the three insurance companies are the biggest non-life insurance provider in India, valued at Rs 1.2-1.5 lakh crore.
According to March 31, 2017, both firms together had greater than 200 insurance programs with a entire premium of Rs 41,461 crore along with a market share of approximately 35 percent.
Their combined net worth was 9,243 crore, using total employee strength of about 44,000 spread over 6,000 offices.
In 2017, state-owned New India Assurance Company and General Insurance Corporation of India were recorded on the bourses.