The Centre has raised the authorised capital of three public sector insurance companies – Oriental Insurance Company Limited (OICL), National Insurance Co. Ltd. (NICL) and United India Insurance Co. Ltd. (UICL) – to enable subscription of capital.
Officials said authorised share capital of entities is increased from time to time to enable subscription of capital.
“In the instant case, the government infused 5,000 crore, i.e. 3,700 crore in NICL, 1,200 crore in OICL and Rs 100 crore in UICL, which will be used to subscribe to the share capital of the respective public sector general insurance companies and issuance of shares to the Centre against the subscription,” said an official, who did not wish to be identified.
A notification issued by the finance ministry on April 13 said that for NICL the authorised capital will now be 15,000 crore, for OICL it will be 7,500 crore and for UICL, authorised capital has been raised to 7,500 crore from 5,000 crore.
The state-owned general insurance companies were staring at low solvency levels and poor financial health, forcing the government to step in. The government notified the amendment to merge schemes of these three insurance companies.
The three state-owned general insurers, which have about 20% market share, have been unprofitable. In the past two years, the government has infused more than 12,500 crore in these three companies. Last month, Parliament approved capital infusion of 5,000 crore in these three insurers.