GIC Re hits 20% upper circuit limit as government mulls privatisation

NEW DELHI: General Insurance Corporation of India NSE 19.97 % (GIC Re) shares got locked at the 20 per cent upper circuit limit on Thursday, after the ET suggested, citing people aware of the matter, that the government was debating whether the reinsurer should also be divested.

The finance ministry and Niti Aayog will together finalise whether the general insurer will be considered for privatisation, a senior government official said.

Following the development, the stock rose 20 per cent to Rs 170.90 on BSE.

Finance Minister Nirmala Sitharaman had said in her Budget speech that the government would take up two public sector banks and one general insurance company for privatisation in FY22.

“Privatisation of GIC Re will only happen if the government decides to exit the reinsurance business and that assessment will be done in consultation with Niti Aayog,” the official said.

At present, the government holds a 85.78 per cent stake in GIC Re. An industry executive, who did not want to be identified, told ET that it may be difficult to privatise GIC Re.

“It will be trickier to sell GIC Re, as under obligatory cession, insurers need to cede 5 per cent of their business with the firm,” he said, adding that it also manages the terrorism and nuclear insurance pool.

The reinsurer reported a net profit of Rs 987.42 crore for the third quarter of the current financial year.

Source: The Economic Times