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A proposal to merge the three state-owned general insurers is likely to take some time and is expected not before early 2019, depending on the timing of the general elections.
Study under way
An informal committee of officials from the three general insurers – National Insurance Company, United India Insurance and Oriental Insurance Company – and from the Finance Ministry, is understood to be looking into the modalities of the process.
The committee is expected to finalise the roadmap of the merger of the three companies and the functioning of the new entity.
An external consultant may also be hired. “Their recommendations are likely to be finalised later in the year following which there are a lot of operational issues that have to be looked into for the merger. It is not going to be an easy process,” said a person in the know, adding that the actual merger may take place only next year.
He added that it could be pushed back even further if the deal is not finalised before the general elections.
“If there is any sort of delay, the merger of the three insurers may have to take place after the 2019 elections, depending on the mood of the next government,” said another official source.
Finance Minister Arun Jaitley had, in the Union Budget 2018-19, proposed the merger of the three PSU general insurers.
“These will be merged into a single insurance entity and will be subsequently listed,” he had said as part of his Budget speech on February 1.
The move came after a similar exercise last year where state-owned ONGC acquired Hindustan Petroleum Corporation.
Modernisation drive
The Centre has also been keen to modernise and streamline the functioning of the state-owned insurance firms.
In 2017-18, it listed National Insurance Company and General Insurance Company divesting 11.65 per cent and 12.5 per cent of its stake, respectively, in the two companies.
It also had plans to list the other three insurers this fiscal.
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