Share swap could also be considered, according to a Finance Ministry official
New Delhi, Mar. 5 (PTI): Taking cue from ONGC’s buyout of HPCL, the government may look at replicating the same in the insurance sector by asking a cash rich PSU general insurer to buyout the smaller ones.
A Finance Ministry official said apart from buyout by cash-rich general insurers, a share-swap could also be considered for smaller insurers. In the 2018-19 Budget, Finance Minister Arun Jaitley proposed merging three public sector general insurance companies — National Insurance Co. Ltd., United India Insurance Co. Ltd. and Oriental India Insurance Co. Ltd. — into a single insurance entity.
The merged entity would be subsequently listed on the bourses. The official said if an insurer buys stake in another, the government will get some money in return of its stake.
“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.
Cash, bank balances
As on March 31, 2017, Oriental India Insurance Co. had cash and bank balance of ₹2,357 crore compared with ₹1,916 crore held by United India Assurance Co. and ₹1,587 crore by National Insurance Co.
In the current fiscal, which ends in March, two other PSU insurers — General Insurance Corp. and New India Assurance Co. Ltd. — got listed on the bourses.
