GOVT INTERESTED IN PRIVATISING GENERAL INSURER THIS YR

NEW DELHI: Success with the initial public offering (IPO) of Life Insurance Corp. of India (LIC) may prompt the government to privatise one of its general insurance companies this year, two people aware of the matter said.

After the listing of LIC, the government will start work to identify one its three general insurers—National Insurance Co., United India Insurance Co. and Oriental India Insurance— for privatisation, and begin the work on it after their first quarter results are in, the people cited above said on condition of anonymity. Federal think tank NITI Aayog is said to have recommended United India Insurance for privatisation to a core group of secretaries on disinvestment, the people said, though the name is yet to be finalized. A GoM will take the final call on the candidate for privatisation.

United India Insurance is not in the best of its financial health, reporting a net loss of ₹1,485 crore in 2019-20; still, the insurer is considered the best candidate for privatisation, given its nationwide presence and strong market share in various insurance categories. Its losses dropped to ₹985 crore in FY21, and is estimated to have come down further in FY22.

With the government infusing ₹5,000 crore capital in FY23 in the three general insurers (₹3,700 crore in National Insurance, ₹1,200 crore in Oriental Insurance and ₹100 crore in United India) the insurers’ financials and valuations are expected to improve further.

All four public sector general insurers, including the listed New India Assurance, are in the process of appointing external consultants to prepare road maps to restructure business and improve performance.