Giving a new twist to the ongoing mega merger proposal of three public sector general insurers, Oriental Insurance Company(OIC),United India Insurance(UII),National Insurance Company, acting finance minister Piyush Goyal now wants two set of mergers-one between New India Assurance(NIA) and NIC and the second one between UII and OIC.
Addressing a mid-night meeting-though the meeting was scheduled during the day, it started late evening and continued till mid-night- of all the CMDs of all the public sector insurers on July 19, Goyal asked the senior government officials and general insurers present in the meeting to alter the existing merger proposals and take up the new one.
Goyal wanted the new proposal to be pursued immediately by undertaking the valuation exercises of the three unlisted PSU general insurers- UII, NIC, OIC.
“Instead of one merger among three general insurers, that is being followed currently, I would prefer one merger between NIA and NIC and another one between UII and OIC,’’ Goyal is believed to have told the attending CMD s of the PSU general insurance companies.
However, he couldn’t elaborate his ideas further at the July 19th meeting as he had to leave the venue in the middle to attend something else.
Puzzled at this sudden drop of the proposal from Goyal,the CMDs of the general insurance companies,who had their first meeting with the acting FM, had checked with the ministry of finance(MoF) about the new proposal. And, in turn they were advised by the MoF that the status quo on the ongoing proposal to merger three companies should be maintained till Arun Jaitley, who is on leave on health ground and is likely to join his previous job as the finance minister on Aug 14,resumes office.
Some of the CMDs of the PSU general insurance companies who had attended the July 19th mid-night meeting have confirmed the development.
“We were told not to act on Goyal’s proposal for now,’’ said a senior official of a public sector general insurance company who had attended the meeting.
From the MoF, Debasish Panda, additional secretary,(Insurnace & Finance Inclusion), N Srinivasa Rao, joint secretary, and among the CMDs of PSU general insurance companies, G Srinivasan of NIA(retired on Jul 31), AV Girija Kumar of OIC and other senior directors of the NIC and UII were in attendance of the acting FM’s meeting.
VK Sharma, chairman, Life Insurance Corporation(LIC), Alice Vaidyan, CMD, GIC Re and TL Alumelu, CMD, Agriculture Insurance Corporation(AIC) were also present in the meeting.
While presenting the Budget 2018-19, finance minister Jaitley had unveiled the merger proposals of three PSU general insurers to create better valuation..
Though S Garg, economic affairs secretary, immediately after the Budgetary announcement, had said that the government would be keen to complete the mergers in the current fiscal and would go for the listing of the merged entity immediately , the progress of the implementation of the proposal has been very slow. Now, there are enough indications to show government’s shifting priorities to strengthen the weak financials of these merging general insurers rather than making them one.
“What is the point of merging three weak companies in a hurry as It wouldn’t serve any purpose,’’ said MoF sources adding that the priority now is to appoint all the CMDs in the PSU general insurance companies and improve their performance.
“Government is now serious about improving the performance of these merging companies than merging them,’’ said MoF sources.
The GIPSA, the official association of the four PSU general insurers and GIC Re had already called for bidding for the appointment of a consultant to help implementing the mergers and listing of the merged company.
Sources point out eight consultants, including all the well known names, have submitted their biddings which are being evaluated by a three member panel from three merging companies and MoF would soon choose a consultant.
Some of the those who have participated in the bidding are-, McKinsey, Deloitte, Boston Consulting Group(BCG),Earnst & Young(E&Y), PwC India.