Cabinet OKs Listing General Insurance Companies in a Boost to Divestment Plan

The government has approved listing of five state-run general insurance companies, Finance Minister Arun Jaitley said on Wednesday. This clears the way for the government to further accelerate its plans to raise money through disinvestment of equity stakes in PSUs (public sector undertakings), following its other similar recent initiatives.

The government holds entire 100% stake in all the five state-run general insurance companies, namely, New India Assurance Company, National Insurance Company, Oriental Insurance Company, United India Insurance Company and a re-insurance firm General Insurance Corp. Jaitley said the government holding in these five companies will gradually fall to 75% post listing. This is in line with India’s listing requirements as mandated by the regulator.

The listing may include both, issuing fresh shares with the proceeds going to the companies itself, and offer for sale of existing shares with the proceeds going to the seller – the government. However, it was not immediately clear if the government is targeting listing of all five companies in the current financial year itself. Jaitley, earlier last year in his budget proposals, had said that the government proposed to undertake important banking sector reform and public listing of public sector general insurance entities. India has already raised the foreign direct investment limit in insurance sector to 49% from 26%.