The government expects to complete the merger of three state-owned general insurance companies by 2019-20.
The merger of National Insurance Company, United India Insurance Company and Oriental India Insurance Company was first announced in the Budget 2018-19 and the government intended to complete the process in current fiscal itself.
As per the interim budget document 2019-20 released on Friday, the merger is under process and will see completion by next financial year as various steps are being taken.
However, according to the media reports, the department of investment and public asset management (DIPAM) had asked the department of financial services to get the issue of merger of the three companies examined and prepare a fresh road. There is a view within the government that the issue needs to be thoroughly examined before rushing into a merger.
“Mergers take time and you should take time in mergers anywhere. I am telling you with experience mergers have natural obstacles in terms of culture and manpower if nothing else. So, once you align the business then you should start aligning the culture and manpower and you have to go to the last man to be able to do so. Mergers are one of the difficult transactions, it calls for skills, which are not available in abundance,” DIPAM secretary Atanu Chakraborty told Times of India .
“I am not able to put a timeline because I have not reviewed it. I intend to do so,” he is quoted to have said..
As on March 31, 2017, the three companies together had more than 200 insurance products with a total premium of Rs 41,461 crore and a market share of around 35 per cent.
Their combined net worth is Rs 9,243 crore with total employee strength of around 44,000 spread over 6,000 offices Initial estimates suggest that the combined entity formed after the merger will be the largest non-life insurance company in India, valued at Rs 1.2-1.5 lakh crore.
According to sources, a consultant has been shortlisted to advise on the proposed merger.
The consultant, appointed on the basis of the bid floated last year in June, is expected to advise on organisational restructuring, rationalisation of human resources, management of operational issues, regulatory and compliance issues.
In 2017, New India Assurance Company and General Insurance Corporation of India were listed on bourses.