Consultant to look at merger of three insurance cos: UIIC
Chennai: The Government would appoint a consultant to look after the merger of the three state-owned public sector insurance companies, a top official of a public sector firm said here on Tuesday.
"We at United India want the two other companies to merge into United India. Among the three, United India is the largest company. We want them to merge into us", United India Insurance Company, CMD M N Sarma told reporters here.
The proposal for merger of Oriental Insurance, National Insurance Company and United India Insurance was announced in the budget for 2018-19.
Union Finance Minister Arun Jaitley in the Budget speech had announced that the three companies would be merged into a single insurance entity and be subsequently listed.
To a query on whether the company would take up a campaign to make Chennai as its headquarters after the merger, he said "unfortunately, as government employees we cannot do it as a campaign. What we can do is we can suggest and then validate how important it will be for us".
The discussions on the merger was yet to advance and the government would appoint a consultant to study the feasibility of the merger, he said.
"A consultant is going to be appointed,who will study all three companies. Which model they are going to follow, whether the two companies will be merged into one or all the three going to be merged into one and a separate new entity will be formed, we do not know. We have to wait and watch", he said.
The three public sector insurance companies together collected a total premium of about Rs 44,000 crore in 2016-17 and their combined market share was close to 35 per cent in the general insurance industry.
Earlier, declaring the financial performance for the year ending March 31, 2018, Sarma said Profit After Tax for the period was at Rs 1,003 crore compared to a net loss at Rs 1,914 crore in the same period last year.
The gross direct premium income clocked for the 2017-18 fiscal grew to Rs 17,430 crore from Rs 16,063 crore registered in the same period last year.
"In Motor insurance there was 30 per cent growth last year. In group health portfolio, we deliberately gave away almost Rs 800 crore business and that was seen in the profitability", he said.
The solvency recovery drivers were prudent underwriting practices, re-pricing strategies, quota share treaty and subordinated debt of Rs 900 crore, he said.
On the outlook for the current financial year, Sarma said the focus would be on increasing the "profitability and improving solvency ratio".
"Compared to industry growth of 15 per cent, we grew by 8.1 per cent. We are looking at a growth of 10-12 per cent (for the current financial year)", he said.
Sarma said the company would soon launch health insurance products offering cover upto Rs one crore, compared to the earlier maximum limit of Rs 10 lakh.
"We are launching new health insurance products upto Rs one crore. They are yet to approved by IRDA (Insurance Regulatory Development Authority)", he said.