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New India Assurance, the country’s largest general insurer, is all set to go public in the next fiscal year, said a top company official.
“We are in the early stages of formalities for listing. The valuation process is yet to start. We expect it to go through quickly once the process starts,” said G Srinivasan, Chairman and MD of the company.
The Centre fully owns all four state-owned general insurers –– New India Assurance, National Insurance Company, The Oriental Insurance Company, and United India Insurance.
The Insurance Laws (Amendment) Act, 2015 allows the four companies to raise capital subject to the government equity “not being less than 51 percent at any time.”
According to Finance Ministry officials, the government plans to offload 10 per cent of its stake in the four companies. New India Assurance is expected to be the first to get listed.
In the Union Budget, Finance Minister Arun Jaitley had announced that the Centre plans to list all four companies to ensure higher transparency and accountability. The Centre is also looking to list General Insurance Corporation, the state-owned reinsurer.
Industry experts say the Centre may unlock considerable value by divesting its stake in the four insurers.The lack of underwriting profitability and the huge losses in key segments such as group health and motor insurance may deter high valuations at present, they add.
However, Srinivasan said that unlike their international peers, Indian insurers maintain huge reserves.
“While underwriting profitability is an important parameter, it does not factor in investment income; we cannot just apply foreign concepts,” Srinivasan said.
“Indian general insurers have large technical reserves, and those funds generate investment income,” he added.
Mumbai-headquartered New India Assurance, which operates in 28 countries, reported a 31 per cent growth in net profit in FY15 at ₹1,431 crore.
For the nine-month period ended 31 December 2015, the company posted 14.42 per cent growth in global premium at ₹13,219 crore.
Its net worth, including fair value of investments, stood at ₹30,391 crore. The asset base of the company was ₹60,674 crore.
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