The proposed merger of the three public sector general insurance companies is likely to take place in current fiscal, according to sources.
“We will further bring down the losses before setting up a combined entity,” said one of the officials.
The other official said the government is also looking at issues such as the need for a review of the HR practices across the three firms. “Right now there are no synergies,” the official said. “Any merger will further impact the commercial interest of these insurers.”
The government had plans to list the merged entity. In 2017-18, it had listed Newindia and GIC RE, divesting 11.65% and 12.5% stakes, respectively, in the two companies.
An executive at Oriental India Insurance said that the government is also expected to infuse some capital to help these companies.
In quarter ended September last year, the three insurers had posted a combined loss of around Rs. 1,800 crore.
Oriental had posted a loss of Rs 240 crore in the second quarter of this fiscal, against a profit of Rs 200 crore in the quarter ended September 2017. Market share of National Insurance Company for gross direct premium till December 2018 fell by 9.52% to 8.63%.
United India Insurance share also came down by around 4.88%. Last year, the government had initiated a six-point reform agenda for general insurers which included sustainable and prudent business, talent management and customer orientation.