To improve on the health of non-life insurance companies in the private sector space, govt in budget 2020 may announce capital infusion for them. Through first supplementary demands for grants for 2019-20 in December, the government infused a total of Rs. 2500 crore in three public sector insurance companies that include National Insurance, Oriental Insurance and United India Insurance.
Further as per sources to comply with the solvency margin, these companies would require an additional Rs. 10000- Rs. 12000 crore. Despite facilitating the company's financial standing, the proposed merger will also be furthered through these funds. Sources say announcement on capital infusion can be made on February 1 when the Budget for Fy 20-21 will be announced.
In the earlier budget, there was announced that these non-insurance companies will be merger but this could not be completed owing to the poor health of these firms. Further post the merge, the single entity will make its debut on the Indian stock exchanges.
Post the merger, the company is estimated to be valued at Rs. 1.2-1.5 lakh crore.