General insurer privatisation rebooted

New Delhi: The government will restart the selection process for privatising a state-run general insurer in the next financial year, people with knowledge of the matter said days after Parliament passed a bill to raise the foreign direct investment (FDI) limit in the insurance sector to 100%.Of the four public sector general insurers, only listed New India Assurance is profitable while National Insurance, United India Insurance and Oriental Insurance remain loss-making despite a marginal turnaround."We expect more players to show interest, and better valuations," said a government official, who did not wish to be identified, adding that all options are being weighed. 126126998 Last week, Parliament passed the Sabka Bima Sabki Raksha (Amendment of Insurance Laws) Bill, 2025, enhancing FDI in the insurance sector from 74%, besides giving more power to the Insurance Regulatory and Development Authority of India (IRDAI).Another government official said a performance review of the four state-run insurance firms will be held after December quarter results, following which further intergovernmental discussions will be held. "There is a case for capital infusion in the loss-making insurers. We will need to see which firms have the potential to turn around on their own," the official said on condition of anonymity, adding that private sector interest may also depend on the chosen firm's financial health.Oriental Insurance, which has losses of around ₹8,293 crore on its balance sheet, reported a profit of ₹86 crore for the second quarter of 2024-25, down from a profit of ₹210 crore a year ago. The latest solvency margin ratio as reported by the firm stood at -1.01 and 0.30 with full forbearance. United India Insurance Company made a turnaround in 2024-25, posting a net profit of ₹154 crore net profit for the fiscal. But as of September 30, 2025, the firm's losses stood at ₹3,297 crore. The solvency margin ratio stood at -1.44.National Insurance reported a loss of ₹284 crore for the September quarter, against a ₹374 crore profit a year ago. It reported a solvency ratio of -0.75, as of September 30. As per the IRDAI, all insurance companies need to maintain a surplus of 1.5 times the liabilities at all times. The solvency margin - the minimum margin of assets required by an insurer in excess of its liabilities - is akin to a bank's capital ratios. Finance minister Nirmala Sitharaman had announced in her 2021-22 budget speech the government's intention to privatise two public sector banks and one general insurance company.In August 2021, the government had notified the General Insurance Business (Nationalisation) Amendment Act, paving the way for reducing its stake in state-owned general insurers to below 51%.

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