The government has called off the long-deliberated merger of the three public sector non-life insurers – National Insurance, Oriental Insurance and United India Insurance – and has announced an additional capital infusion of INR99.5bn ($1.3bn) into the companies.
The Union Cabinet approved a INR124,5bn equity infusion into the non-life companies, which includes INR25bn already invested in the fiscal year ended 31 March 2020 (FY2020), reported The Times of India.
“The process of the merger has been ceased so far in view of the current scenario and, instead, the focus shall be on their profitable growth,” said a government statement.
Of the INR99.5bn capital injection, INR34.75bn will be released immediately, while the balance INR64.75bn will be released in one or more tranches.
To enable the capital infusion, the Cabinet approved an increase in the authorised share capital of National Insurance to INR75bn and that of United India and OICL to INR50bn each.
The merger proposal was announced by former finance minister Arun Jaitley in his Budget speech in February 2018 and confirmed by finance minister Nirmala Sitharaman as recently as July 2019. The boards of the non-life companies have approved the merger proposal.