Insurance merger on hold, govt may pick one for sale

The Centre may drop its plan to merge three general insurers and instead pick one of them for privatization this fiscal year, two people aware of the development said.

- Subhash Narayan & Rhik Kundu

The other two may be provided additional capital to strengthen their balance sheets, the people cited above said on the condition of anonymity. To begin with, the government will assess the financial performance of all three insurers in the coming quarters.

"The aim is to strengthen the general insurers' balance sheets through recapitalization before any potential merger is considered," the person added.

While National Insurance, United India Insurance and Oriental India Insurance are considered weak, market leader New India Assurance is seen as strong and not a candidate for privatization.

The Union budget 2018-19 had proposed merging the three weak insurers into one and listing it on the stock exchanges, a plan that has made little progress.

Federal think tank NITI Aayog recommended United India Insurance for privatization to a secretaries' panel in FY22, but that has not taken off either.

At the end of the September quarter, solvency ratios of National Insurance, Oriental Insurance, and United India Insurance stood at -0.45, -1.02, and -0.71, respectively, while that of New India Assurance stood at 1.81.