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March 18, 2016
One or two government-owned non-life insurance companies may launch an initial public offering in the 12 months beginning on 1 April 2016, with the Department of Financial Services now working on the valuation of the country’s four state-run general insurers.
The government may sell a 10% stake in the insurance companies, with the IPO of New India Assurance likely to be the first on the block, sources familiar with the matter told The Economic Times. Oriental Insurance, National Insurance and United India Insurance are the three other government-owned general insurance companies. A public listing of the companies is a way to ensure higher transparency and accountability. To promote this objective, the general insurance companies owned by the government will be listed on the stock exchanges, Finance Minister Arun Jaitley said in his Budget speech on 29 February.
Before the state-owned insurers are listed, they would have to clean up their books and operations, reported Business Standard citing industry officials. This would involve bringing down losses across segments like motor third-party, group health, fire and engineering among others. Further, underwriting profitability is essential to attract the desired valuations. No insurance company is currently listed on the Indian stock market.