The Indian government may look at asking a cash-rich public sector general insurer to buy out smaller ones, reported Press Trust of India.
A Finance Ministry official said apart from buy out by cash-rich general insurers, a share-swap could also be considered for smaller insurers.
In his Budget speech for the fiscal year starting 1 April 2018, Finance Minister Arun Jaitley had proposed merging three public sector general insurance companies–National Insurance United India Insurance and Oriental India Insurance–into a single insurance entity. The merged entity would be subsequently listed on the bourses.
“Cash-rich insurers may be asked to buy out the smaller ones where there is operational synergy. A share swap could also be considered,” the official told PTI.
At 31 March 2017, Oriental India Insurance had cash and bank balances of INR23.57 billion (US$362 million) compared with INR19.16 billion held by United India Assurance and INR15.87 million by National Insurance.
In the current fiscal which will end on 31 March, two other government-owned insurance entities— GIC Re and New India Assurance– were listed on the bourses. The initial public offering of these two companies fetched INR 209.72 billion for the exchequer.