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Business News/ Industry / Govt asks Oriental Insurance, United India to improve finances
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Govt asks Oriental Insurance, United India to improve finances

State-run United India Insurance, Oriental Insurance have suffered net losses of Rs429 crore and Rs382 crore, respectively, in the first half of 2016-17

While United India Insurance had posted a net profit of Rs356 crore, Oriental Insurance had registered a profit of Rs335 crore a year ago.Premium
While United India Insurance had posted a net profit of Rs356 crore, Oriental Insurance had registered a profit of Rs335 crore a year ago.

New Delhi: The finance ministry has asked two public sector general insurance companies—Oriental Insurance Co. Ltd and United India Insurance Co. Ltd—to improve their finances as the government looks to list the state-owned non-life firms.

“There are issues with two firms and they have been asked to pull up their socks and rev up their finances," people in knowledge with the matter said. Hopefully, situation is expected to get better soon, they said.

Due to huge underwriting losses, United India Insurance and Oriental Insurance, have suffered net losses of Rs429 crore and Rs382 crore, respectively in the first half of the current fiscal. Both were profitable companies in the year-ago period.

While United India had posted a net profit of Rs356 crore, Oriental Insurance had registered a profit of Rs335 crore a year ago.

United India’s solvency ratio, against a regulatory requirement of 150%, currently stands at 1.56% while the Oriental’s solvency ratio has fallen to 1.14% during the reporting period.

Another public sector general insurer National Insurance Co. Ltd, though booked a net profit of Rs128 crore, has continued to have a lower solvency ratio of 1.26% as on 30 September.

Last year, finance minister Arun Jaitley in his budget speech had proposed listing of PSU general insurance. “...(proposed to) undertake important banking sector reform and public listing of public sector general insurance and undertake significant changes in FDI policy," he had said while unveiling the budget.

“Public shareholding in government-owned companies is a means of ensuring higher levels of transparency and accountability. To promote this objective, the general insurance companies owned by the government will be listed in the stock exchanges," he had said.

There are four public sector general insurance companies—New India Assurance Co. Ltd, National Insurance Co. Ltd, Oriental Insurance Co. Ltd, United India Insurance Co. Ltd. Besides, there are two specialised insurers—Export Credit Guarantee Corp. (ECGC) and Agriculture Insurance Co. of India Ltd (AIC)—one life insurance insurer, Life Insurance Corp. of India (LIC). There are 52 insurance companies operating in India, of which 24 are life insurance business and 28 in general insurance.

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Published: 08 Jan 2017, 10:48 PM IST
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