M SaraswathyMoneycontrol
Following the Cabinet nod for the listing of public sector general insurers and the sole state-owned reinsurance company GIC Re, the first listing could happen by September this year.
The PSU general insurers include New India Assurance, National Insurance, Oriental Insurance and United India Insurance. GIC Re is also a public sector company, but is involved in the reinsurance space or provides covers for insurance companies against large risks that they take on the books.
Based on the balance sheet size, net profit and underwriting performance, it is anticipated that GIC Re and New India will be among the first to be listed.
Alice Vaidyan, Chairman and Managing Director, GIC Re said that this is a positive development and a long-awaited move. “It will help us improve the brand image. We expect the process to be completed latest by the next 10-12 months,” she added.
G Srinivasan, CMD, New India said that this will set a good benchmark for the industry and motivate other players to also list. He added that they hope to complete the IPO in the next 6-8 months and could ‘possibly’ be among the first to be listed.
He said that it will lead to better corporate governance and transparency. “It will aid sharing company prosperity with the retail shareholders. Even employees will get an opportunity to have a stake in the company,” he added.
Listing of these insurance companies was announced in the Union Budget of 2016-17 by Finance Minister Arun Jaitley. However, he had not given a timeline for these insurers to be listed on the exchanges.
K Sanath Kumar, CMD, National Insurance said, “We have been ready for listing and welcome this move. It will take 6-7 months minimum to hit the market.”
The Cabinet has approved plans to divest a 25 percent stake in each of these five fully-owned public sector general insurers. Finance minister Arun Jaitley told a news conference that all the five state-owned general insurance companies – New India Assurance, Oriental Insurance, National Insurance, United India Insurance and national reinsurer General Insurance Company -- will be listed on stock exchanges by way of issue of fresh shares or offer for sale (OFS).
Some of the PSU insurers will have to not only improve underwriting profits but also have a better solvency before they proceed to listing. As per norms, they are required to maintain 150 percent solvency at all times.
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