Struggling PSU insurers may get a helping hand from the finance minister

livemint.com:

Union budget or in the latter part of the current fiscal year, two people aware of the matter said. The finance minister may allocate ₹4,000-5,000 crore for three public sector insurance companies, one of the two people cited above said, requesting anonymity. "The budget could also provide only a token capital for insurance companies, with more funds released after completing further assessments for fresh requirements," the person said.

In the interim budget for FY25 presented in February, the Centre had considered providing capital support to general insurers; however, the decision was postponed as the Centre wanted to first study their financial health in the June quarter, the second person mentioned above said. The capital infusion will help improve the financial health of three firms—National Insurance Co. Ltd, Oriental Insurance Co.

Ltd and United India Insurance Co. —as well as their solvency ratio, a measure of the financial buffer to settle all claims in extreme situations. C.R.

Vijayan, former secretary general, General Insurance Council said: “There is marked improvement in performance of the three weaker public sector general insurance companies since the last capital support was extended by the government in FY22. These companies have also completed implementation of recommendations given by EY to restructure their operations. Additional capital infusion at this juncture would help the insurers to further strengthen their financials and reach closer to Irdai-mandated solvency ratio of 1.5 (times)".

The solvency ratio of all three public sector insurers is well below 1, lower than 1.5 times mandated by the insurance regulator to lower risks. In terms of solvency margin, the required value is 150%. Solvency