Consultancy Ernst & Young (EY) has suggested that state-run National Insurance, United India Insurance and Oriental Insurance should be merged within 18 months, Business Standard reports.
The management consultancy had evaluated several options, including merging the three insurers with New India Assurance, the report said.
“All the scenarios were studied by the consultant. The biggest problem in merging the three companies with New India Assurance was the listed status of the latter,” a government official told the paper.
Moneycontrol could not independently verify the story.
A core committee formed by the three insurers to look into the merger had also recommended an 18-month time frame, the report said.
The government had announced a plan to merge National Insurance, United India Insurance and Oriental Insurance in February last year. It also announced its intention to list the merged entity on the stock exchanges.
The three companies had in July appointed EY to chalk out a plan for the merger. The merger is unlikely to lead to a significant number of layoffs, since all three firms have reduced recruitment and are operating with an optimal workforce, the article stated.
EY will also conduct a valuation exercise of the assets of the three companies and submit a project report within the 18-month time frame, it said.
Integration of work culture, rolling out a common software and rationalisation of branches were the challenges highlighted, the report added. The three companies have a total of 6,000 offices across India.
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