Government disburses Rs 2,500 crore for PSU insurers

BENGALURU: The Central government on Thursday has disbursed the Rs 2,500 crore -- promised in December 2019 for recapitalisation -- to the three public-sector insurance companies.

The government has given National Insurance, whose solvency margins are poor, Rs 2,400 crore and Rs 50 crore each to Oriental Insurance and United India. Of the Rs 6,950 crore promised in this year's budget -- the government is still in talks with insurance companies, who are each wanting a larger chunk that what the government is pre-disposed to give. Merger talks have also been pushed back, said sources. Listing of the merged entity will also be delayed as a result of this.

National Insurance has been in trouble with its solvency ratios dipping below regulatory requirement of 150%. Solvency ratio is the buffer an insurance company has to pay its claims. When National Insurance's solvency dipped further into the red to less than 100% this year, insurance regulator IRDAI represented to the Finance Ministry the alarming situation with the PSU.

Source said, National Insurance Co had asked for Rs 3,000 crore in the interim. Oriental Insurance and United India Co's solvency margins have also lately been concerning - with both companies just meeting solvency requirements.

Earlier this month, Oriental Insurance Co had also said that it would require Rs 3,000 crore in capital support from the government to meet regulatory solvency requirement in the next fiscal.

Source: The Times of India