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Informist, Tuesday, Apr. 7, 2026

By Priyasmita Dutta and Sagar Sen

NEW DELHI – The government may start the process of merging the three unlisted public sector general insurance companies either into a single entity or into The New India Assurance Co Ltd. in 2027-28 (Apr-Mar), a senior finance ministry official said. "We have done some preliminary work on them... not all are in healthy shape, so we could not go forward with the merger in the past," the official told Informist. 

The government had proposed in the FY19 Budget to merge the three unlisted public-sector general insurance companies and list the merged entity.

"Both the options are still on the table... either merging the unlisted companies into one and then listing it, or directly merging all three into the listed entity," the official said. "There are discussions between the financial services department and the disinvestment department on the merger of PSU general insurance companies," the official said. 

Of the four PSU general insurers, three – National Insurance Co Ltd., United India Insurance Co Ltd., and Oriental Insurance Co Ltd. – are unlisted. The New India Assurance Co is the only listed public-sector general insurance company.

In the Budget for FY22, the government said it would privatise one general insurance company during the year. However, there has been no progress on the proposal so far. The government's original plan was to privatise one of the three general insurers, but it could not do so as their financial performance was never up to the mark, which would have affected valuations, the official said. 

Over the last few years, the government has been considering several options, including mergers, listing on the exchanges, and strategic disinvestment. "We may need to monitor their financial performance for at least a few more quarters," a second finance ministry official said.

The three unlisted insurers require financial support, considering they have depleting funds. The losses of these companies are rising. For the December quarter, Oriental Insurance and National Insurance reported losses of INR 30.52 billion and INR 3.99 billion, respectively. United India Insurance posted a net profit of INR 1.20 billion in the December quarter.

The New India Assurance, on the other hand, reported a net profit of INR 3.72 billion in the December quarter, up 5% from a year ago. On Tuesday, the company's shares ended 0.3% higher at INR 124.26 on the National Stock Exchange.

"There is a need to first strengthen their fundamentals," the first official said. "Otherwise, we will be stuck in this loop where the better entity does not want to weaken its financial conditions by merging with the weaker ones," the official added.

To support the three unlisted insurance companies, the government infused INR 50 billion in them in 2022. Since then, the government has not infused any capital into the insurers, though the official admitted the need to provide them with capital. A merger remains a likelier option given the lack of investor appetite after the pandemic.

According to the first official, the government is also proceeding cautiously with the merger, given the volatility in financial markets driven by various external factors, including geopolitics.

The government also intends to sell its stake in Life Insurance Corp. of India, which may get delayed to FY28 if markets see volatility, the official said. "Even for LIC, we will have to look at the stock performance before bringing down the government stake any further," the second official said. 

The government currently holds a 96.5% stake in LIC, and the regulatory mandate is to reduce the stake to 90% within five years of listing. The government had sold a 3.5% stake in the insurer through an initial public offering in FY23, raising INR 205.16 billion. Based on the current market price, the government could raise INR 50 billion by offloading a 1% stake in the insurance behemoth. Tuesday, LIC's shares ended 0.2% lower at INR 743.20 on the National Stock Exchange.

As such, the Securities and Exchange Board of India's Securities Contracts (Regulation) Rules mandate that all listed companies must achieve a minimum public shareholding of 25% within five years of listing. However, LIC was required to increase the public shareholding to 10% within five years and was given an additional five years to reduce the promoter stake to 75%.    End

Edited by Saji George Titus

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