3 PSU non-life insurance cos to meet on Feb 16 on merger

The three public sector general insurance companies will be meeting on February 16 to deliberate on the proposed merger plan, a top official of United India Insurance said.

As part of divestment of public sector entities, the government has proposed in the Budget to merge National Insurance Company, United India Insurance and Oriental Insurance Company into one and subsequently list the new entity on stock exchanges.

"All the three public sector general insurance companies are meeting on the 16th of this month for discussions on Budget pronouncements," United India Insurance chairman and managing director M N Sarma said here today on the sidelines of Assocham organised health insurance summit.

"We hope to have some roadmap on merger and health insurance scheme in the meeting. We expect the merger to be completed before the next vote on accounts," he said.

This means the three companies could be merged by the middle of 2019.

The roadmap for the merger will be laid out by the government, chairman-cum-managing director of National Insurance Company K Sanath Kumar said.

National, United India and Oriental together collected a total premium of about Rs 44,000 crore in 2016-17 and the three of them combined held a market share of close to 35 per cent among all the general insurance companies including the private sector insurers and standalone health insurers.

The merging of the three state-run insurers will lead to the creation of a mammoth non-life company and expected to be a major contributor to the divestment target of Rs 80,000 crore set for the fiscal year 2018-19.

The profitability of most general insurance companies including the state-owned ones has been under pressure owing to rising underwriting losses and higher claims.

In 2017, the government listed two state-owned insurers New India Assurance Company Ltd and General Insurance Corporation of India.