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Get board nod for IPOs: Government to PSU insurers

The Centre may mop up around Rs 10,000-15,000 cr from listing of New India Assurance, United India Assurance, National Insurance Company, Oriental Insurance Company and GIC Re.

Written by George Mathew | Mumbai | Published: May 14, 2016 1:16 am

The government has kick started the process to list five public sector general insurance companies. A formal communication from the government has instructed these companies — New India Assurance, United India Assurance, National Insurance Company, Oriental Insurance Company and GIC Re — to move a board resolution to list their companies on the stock exchanges.

The government is likely to mop up around Rs 10,000-15,000 crore from the listing of these five companies. As insurance is one of the few major segments which is yet to go public, the government move is likely to cheer the markets. “We have passed the resolution in our last board meeting. It needs to be approved by the government. It may take eight to nine months before the entire process is completed to go for an IPO,’’ said G Srinivasan, CMD, New India Assurance.

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In the first phase New India Assurance, the largest non-life company in the country with operations in 22 countries and the country’s sole reinsurer GIC Re is likely be listed on the stock exchanges. “We will utilise the funds raised in IPO to expand our operations and maintain growth,’’ Srinivasan said. While presenting the Budget, finance minister Arun Jaitley had indicated the government’s plan to list the PSU insurers. Under the Insurance Laws (Amendment) Act, the government can dilute the equity in PSU insurance companies by up to 51 per cent to raise capital keeping in view the need for expansion of business. However, divestment or listing of Life Insurance Corporation is not in the agenda of the Centre at this juncture though a section of India Inc was lobbying for the same. “The listing of five PSU insurers will increase the depth of the market and create a new segment for the investors,” said an official.

Meanwhile, New India Assurance has announced that it has an investment corpus of Rs 50,000 crore and technical reserves that can be utilised for meeting the expenses of unforeseen claims, of around Rs 33,000 crore. The net worth of the company including fair value of investments stood at Rs 28,845 crore. While the asset base of the company was about Rs 62,880 crore, the market value of investments as on March 2016 was Rs 45,267 crore.

NIA posted a profit after tax of Rs 829 crore in 2015-16. Increasing its market share in the domestic market, the firm has recorded a global premium of Rs 18,371 crore, up by 14.5 per cent in 2015-16. “We are targeting a global premium of Rs 20,800 crore for the current financial year,’’ he said.

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