Press Trust of India
Mumbai, August 30: Even as the new insurance law has an enabling provision for allowing five public sector general insurers to go public, the government has no plans at present to dilute its stake in them. “As of now there is no plan to list any of the general insurance companies,” Financial Services Secretary Hasmukh Adhia, who will take over Revenue Secretary from next month, told PTI.
The new Insurance Act allows the government to disinvest its stake in five general insurance companies — New India Assurance, United India Insurance, National Insurance, Oriental Insurance and sole reinsurer GIC Re. However, the new law keeps Life Insurance Corporation (LIC) out of this ambit and therefore will continue to be a 100 per cent state-owned company. “All the four state-owned general insurance companies are well-capitalised and they don’t need capital through IPOs,” chairman and managing director of a public sector general insurance company said.
Analysts believe the government which has disinvested in all the state-owned banks may exercise the same option for state-owned general insurers some time later. “None of these companies, except one or two, has financials which can really enthuse investors to pick up stake in these companies. All of them continue to have large underwriting losses and low on profitability,” a market analyst said. However, New India Assurance, which is the largest general insurer, has said the call has to be taken by the government.
“It is up to the government to take a call. We haven’t heard anything from them,” New India Assurance chairman and managing director G Srinivasan had said while announcing the June quarter results recently.
