The Finance Ministry has floated a Cabinet note on the proposed merger of three state-owned general insurance companies-National Insurance, United India Insurance and Oriental Insurance, a senior government official has said.
“The Cabinet note has been floated, and we are likely to get the approval before December-end after which the insurance companies will seek the necessary approvals for the merger,” the official told Cogencis.
The merged entity is likely to commence operations on 1 April next year.
In the Budget announced in February 2018, the Finance Minister had proposed the merger of the three public sector general insurance companies. The government plans to list the merged entity on stock exchanges.
“There is a need to provide financial support to these insurance companies for the merger to go ahead,” the official said.
The Department of Financial Services is studying the financial position of the three companies and will take a call on capital infusion. A decision on the same is likely to be taken in the upcoming session of Parliament, that starts on 18 November, another finance ministry official said.
At 31 March 2019, the solvency ratio was 1.04 for National Insurance and 1.57 for Oriental Insurance while it was 1.54 for United India Insurance at 31 March 2018.
The IRDAI requires general insurance companies to maintain a minimum solvency ratio of 1.50.