New Delhi: Finance Minister Nirmala Sitharaman can announce a second round of capital infusion for general public sector insurance companies in the next budget to improve their financial health.
The government infused Rs 2.5 billion rupees in the three insurers: National Insurance, Oriental Insurance and United India Insurance, through the first complementary claims for grants for 2019-20 last month.
However, these companies would require an additional dose of Rs 10,000-12,000 crore to meet the prescribed solvency margin, sources said.
The sources also said that the announcement for this purpose can be made in the 2020-21 Budget that is scheduled for February 1.
Infusion will not only improve your financial health but also facilitate the merger announced in the 2018-19 Budget.
In the 2018-19 Budget speech, Finance Minister Arun Jaitley announced that the three companies would be merged into a single insurance entity.
However, the merger process could not be completed due to several reasons, including the poor financial health of these companies. According to the sources, after the merger, the combined entity will be included in the lists.
Initial estimates suggest that the combined entity formed by merging the three insurers will be the largest non-life insurance company in India, valued at Rs 1.2-1.5 lakh crore.
As of March 31, 2017, the three companies together had more than 200 insurance products with a total premium of Rs 41,461 rupees and a market share of around 35 percent.
Its combined net worth was Rs 9,243 million rupees, with a total employee force of around 44,000 spread over 6,000 offices.
In 2017, the state-owned New India Assurance Company and General Insurance Corporation of India were included in the lists.
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