PSU General Insurers

PSU general insurers asked to cut flab, rationalize branches: Report

The finance ministry PSU general insurers firms, especially National Insurance, Oriental Insurance and United India Insurance, to rationalize branches.

PSU General Insurers

The merger process of three state-owned general insurance companies due to weak financial positions of these three companies.

Instead, the government approved fund infusion of 12,450 crore to meet regulatory parameters.

The finance ministry has asked these companies to cut the flab by rationalizing branches.

Rein in other avoidable expenses like guest houses, etc, sources said.

As part of capital infusion exercise, the government also approved raising authorized share capital of (NICL) to 7,500 crore.

United India Insurance Company Ltd (UIICL) and Oriental Insurance Company Ltd (OICL) to 5,000 crore each.

The 12,450 crore capital infusion approved by the Cabinet in July includes 2,500 crore provided to these companies during 2019-20.

During this year, the government infused 3,475 crore while announcing infusion of the balance 6,475 crore in one or more tranches.

PSU General Insurers

The government in Budget 2020-21 had made a provision of 6,950 crore for capital infusion.

In these three insurance companies in order to maintain the requisite minimum solvency ratio.

Three PSU general insurers, with their large underwriting losses of 14,443 crore.

Together have been responsible for the overall losses of over 7,118 crore in 2019-20.

NICL, with a combined ratio of 160.8% and underwriting losses of 5,759 crore, has suffered losses of 4,108 crore while OICL.

UIIL have been hit with losses of 1,524 crore and 1,486 crore, respectively in 2019-20.

New India Assurance, the only exception out of the four public sector general insurers, posted a profit of 1,418 crore in 2019-20.

PSU general insurance firms told to slash avoidable expenses, improve financial health

General insurance firms, especially National Insurance, Oriental Insurance & United India Insurance ask to rationalize branches.

Cut down avoidable expenses to improve their financial health by the finance ministry.

The ministry has asked these companies to expand their business through digital medium.

They’ve also been asked to cut the flab by rationalizing branches and rein in other avoidable expenses like guest houses.

The Union Cabinet decided to halt the merger process of three state-owned general insurance companies due to their weak financial positions.

Instead, the government approved fund infusion of Rs 12,450 crore to meet regulatory parameters.

PSU General Insurers

The government also approved raising authorized share capital of National Insurance Company Ltd (NICL) to Rs 7,500 crore.

United India Insurance Company Ltd (UIIC) & Oriental Insurance Company Ltd (OICL) to Rs 5,000 crore each.

The Rs 12,450 crore capital infusion approve by the Cabinet in July includes Rs 2,500 crore provided to companies in 2019-20.

The government infused Rs 3,475 crore, while announcing infusion of the balance Rs 6,475 crore in one or more tranches.

The government in Budget 2020-21 had made a provision of Rs 6,950 crore for capital infusion.

In these three insurance companies to maintain the requisite minimum solvency ratio.

NICL, with a combined ratio of 160.8 per cent and underwriting losses of Rs 5,759 crore, has suffered losses of Rs 4,108 crore, while OICL.

New India Assurance, the only exception out of the four public sector general insurers, posted a profit of Rs 1,418 crore in 2019-2020

PSU general insurance companies seek capital infusion ahead of merger

Public-sector general insurance companies which are slated to be merged have urged the government for fund infusion before the amalgamation.

According to top officials of two public sector general insurance firms, the companies in their communication.

The department of financial services have highlighted the need for immediate recapitalization in order to maintain the regulatory solvency ratio & wipe out losses.

 

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