NEW DELHI, Jan 8: Finance Ministry has asked two public sector general insurance companies — Oriental Insurance and United India — to improve their finances as the government looks to list the state-owned non-life firms.
“There are issues with two firms and they have been asked to pull up their socks and rev up their finances,” sources said.
Hopefully, situation is expected to get better soon, sources said.
Due to huge underwriting losses, United India Insurance and Oriental Insurance Co Ltd, have suffered net losses of Rs 429 crore and Rs 382 crore, respectively in the first half of the current fiscal.
Both were profitable companies in the year-ago period. While United India had posted a net profit of Rs 356 crore, Oriental Insurance had registered a profit of Rs 335 crore a year ago.
United India solvency ratio, against a regulatory requirement of 150 per cent, currently stands at 1.56 per cent while the Oriental’s solvency ratio has fallen to 1.14 per cent during the reporting period.
Another public sector general insurer National Insurance, though booked a net profit of Rs 128 crore, has continued to have a lower solvency ratio of 1.26 per cent as on September 30.
Last year, Finance Minister Arun Jaitley in his Budget speech had proposed listing of PSU general insurance.
“…(proposed to) undertake important banking sector reform and public listing of public sector general insurance and undertake significant changes in FDI policy,” he had said while unveiling the budget.
“Public shareholding in government-owned companies is a means of ensuring higher levels of transparency and accountability. To promote this objective, the general insurance companies owned by the government will be listed in the stock exchanges,” he had said.
There are four public sector general insurance companies — New India Assurance Company Ltd, National Insurance Company Ltd, Oriental Insurance Co Ltd, United India Insurance Co Ltd. Besides, there are two specialised insurers — ECGC and AIC — one life insurance insurer, LIC.
There are 52 insurance companies operating in India, of which 24 are life insurance business and 28 in general insurance. (AGENCIES)