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Informist, Tuesday, Mar. 4, 2025

 

By Sagar Sen and Priyasmita Dutta

 

NEW DELHI – Oriental Insurance Co. Ltd. is the most likely candidate for privatisation once the government decides on the strategic disinvestment of one of the three unlisted general insurers, a senior finance ministry official said. "Among the three (unlisted) PSU non-life insurers, Oriental Insurance is the most well placed for privatisation," the official told Informist.

 

Over the last few years, the government has been evaluating a number of options for the public sector general insurance companies. This included potential mergers, initial public offerings, and strategic disinvestment. However, there has been no forward movement on any of these proposals, mainly because of the strained financial status of these public general insurance companies. On this count, Oriental Insurance seems to be relatively better placed.

 

Among its peers, Oriental Insurance has the longest streak of being profitable. It started posting profits from the March quarter of 2023-24 (Apr-Mar), followed by National Insurance Co. Ltd., which became profitable in Jul-Sept quarter of the ongoing fiscal. United India Insurance Co. Ltd. only turned profitable recently in the xDecember quarter, after 7 years of posting losses, a government release said in February. These insurers reported a combined profit of INR 10.66 billion in Oct-Dec, the release had said.

 

Consequently, Oriental Insurance was also the only unlisted public sector general insurer which was not in the red in the previous year. In FY24, Oriental Insurance reported a net profit of INR 186 million. National Insurance posted a net loss of INR 1.87 billion during the period, while United India Insurance reported a loss of INR 8.04 billion.

 

In the FY22 Budget, the government had said it would privatise one general insurance company during the year. However, previously, in the FY19 Budget, the government had proposed merger of the three unlisted public sector general insurance companies, with plans to subsequently list the merged entity. Of the four public sector general insurers, only The New India Assurance Co. is listed on exchanges.

 

The government had infused INR 174.50 billion as capital in these insurers from FY20 to FY22 with the aim of allowing these companies to undertake structural reforms, enhance operational efficiencies, and return to profitability.

 

The government also aims to conclude the process of privatising IDBI Bank within next one year, the official said. The government in October 2022 had invited expressions of interest to sell its 30.48% stake and Life Insurance Corp. of India's 30.24% stake in IDBI Bank.   End

 

Edited by Tanima Banerjee

 

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