Listing of PSU financial subsidiaries to unlock value: DFS Secretary

M Nagaraju says listing subsidiaries of state-owned financial entities will unlock value, strengthen corporate governance, and enhance market oversight

The government would like the subsidiaries of state-owned financial entities to list as soon as they are mature enough, as it will both unlock value and enhance corporate governance, along with increasing market oversight on the functioning and performance of these companies, Department of Financial Services (DFS) Secretary M Nagaraju said during the listing of Canara HSBC Life Insurance in Mumbai on Friday.

 

Nagaraju said, “We have more than 100 subsidiary companies under DFS. We also would like to list some of them as soon as they become mature. One, we can unlock and also bring more corporate governance and market oversight on the functioning and performance of these companies.”

 

Government aims to unlock value through listings

 

Currently, there are five listed life insurance companies, including Life Insurance Corporation of India (LIC), SBI Life Insurance, HDFC Life Insurance, ICICI Prudential Life Insurance, and Max Financial Services, apart from the recently listed Canara HSBC Life Insurance.

 

Among non-life insurers, New India Assurance, ICICI Lombard General Insurance, Star Health and Allied Insurance, Niva Bupa Health Insurance, and Go Digit Insurance are listed companies.

 

At the event, Nagaraju also said that the government’s intention is to unlock the value of subsidiaries of banks, and that other lenders, such as Canara Bank, will take a decision in due course based on market conditions.

 

Several PSU-backed insurers yet to list

 

Currently, PNB MetLife Insurance, backed by Punjab National Bank; IndiaFirst Life Insurance, backed by Bank of Baroda and Union Bank of India; and Star Union Dai-Ichi Life Insurance, backed by Union Bank of India and Bank of India, are among the life insurance companies supported by state-owned lenders that are yet to be listed.

 

‘Insurance for All by 2047’ goal to drive sector growth

 

Speaking on improving insurance penetration, Nagaraju said that the only way to achieve this is by increasing claims paid, which should be treated as an obligation by insurers. The government aims to achieve “Insurance for All by 2047” and is working in that direction.

 

Nagaraju added, “I have seen in the last few years, whenever the incurred claims ratio (ICR) is higher, the market share actually goes up. Those companies that find a reason to deny claims see their market share either stagnate or decline. I think this is how the market should revert and punish the players who are actually not doing their job.”