Cabinet Approves Listing Of State-Owned General Insurance Companies

The Union Cabinet on Wednesday decided to list all five state-run general insurance companies, reducing the government’s stake in them to 75 percent from 100 percent earlier.

The five government-owned insurers are New India Assurance Company Ltd., General Insurance Corporation of India Ltd., Oriental Insurance Company Ltd., United India Insurance Ltd. and National Insurance Company Ltd.

Announcing the decision, Union Finance Minister Arun Jaitley said the government would divest its stake either by issuing fresh equity or through offer for sale, or a combination of both.

The finance minister in his budget speech for 2016-17, had announced that the government will list state-owned general insurance companies to improve transparency and accountability.

Listing the insurers on stock exchanges “necessitates compliance with a number of disclosures and accounting requirements of SEBI (Securities and Exchange Board of India), which acts as an additional oversight mechanism”, according to a statement issued by the finance ministry.

The listing will also improve corporate governance and risk management practices, besides allowing the companies to raise resources from the capital market, instead of being dependent on the government for capital infusion, the statement added.