| The group of ministers, deliberating on the draft amendments to insurance acts, are not in favour of allowing the four public sector non-life insurance firms to list on the bourses.
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| “There is no need to allow the four public sector general insurance companies to go public as the four public sector general insurance companies have over Rs 1,000 crore of reserves each,” said G C Chaturvedi, joint secretary, ministry of finance, on the sidelines of a liability risk seminar.
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| The draft amendments, prepared by the finance ministry, had proposed to amend the General Insurance Business Nationalisation Act to allow the four general insurers to raise equity capital from the market.
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| The finance ministry was considering to allow listing of the general insurance companies so that they have access to capital to meet solvency margins and also fund business expansion, including overseas.
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| However, Chaturvedi said for FY07, National Insurance, which was in the red, has shown improvement and the insurers have adequate reserves for expanding overseas operations.
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| He also said, "A consensus is likely to be reached to allow foreign reinsurers with certain regulatory restrictions to open branch offices in the country. There is also move to bring down the minimum capital requirement for health insurance companies to Rs 50 crore from Rs 100 crore. The paid up capital of the public sector insurers in 2005-06 is Rs 5 crore. Of the four PSUs, National Insurance reported a net loss of Rs 106.25 crore in 2005-06, while Oriental reported lower net profits at Rs 283.92 crore, New India and United have reported higher profits at Rs 716.38 crore and Rs.425.23 crore respectively."
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| As per IRDA norms, insurers have to maintain a required solvency margin (excess of the value of assets over the liabilities) of 1.5 times.
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| However, National Insurance’s solvency has dipped to 1.08. The three other public sector insurers though have a higher solvency margin- New India Assurance has a solvency margin of 3.09, United India Insurance is 2.23, and Oriental is 1.97. |
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