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New Delhi, <keyword id="47209" type="General" weightage="20" keywordseo="finance-ministry" source="Orion">Finance Ministry</keyword> would consider capital infusion in three loss-making public sector general insurance companies based on their financial performance of nine months. The infusion if required would be made in the fourth quarter of the current financial year, sources said. According to sources, the finance ministry last year asked three insurers -- National Insurance Company Limited, <keyword id="94451" type="General" weightage="80" keywordseo="oriental-insurance-company-limited" source="Orion">Oriental Insurance Company Limited</keyword> and <keyword id="356117" type="General" weightage="80" keywordseo="united-india-insurance-company" source="Orion">United India Insurance Company</keyword> -- to chase bottomlines rather than topline and underwrite only good proposals. The financial review would give some idea about the impact of restructuring initiated on the profitability numbers and the solvency margin, sources said. The solvency margin is the extra capital the companies must hold over and above the claim amounts they are likely to incur. It acts as a financial backup in extreme situations, enabling the company to settle all claims. The government last year provided Rs 5,000 crore capital to three insurers -- National Insurance Company Limited, Oriental Insurance Company Limited and United India Insurance Company. Kolkata-based National Insurance Company Limited was given the highest, Rs 3,700 crore, followed by Delhi-based Oriental Insurance Company Limited (Rs 1,200 crore) and Chennai-based United India Insurance Company (Rs 100 crore). According to sources these companies have been asked to improve their solvency ratio and meet the regulatory requirement of 150 per cent. The solvency ratio is a measure of capital adequacy. A higher ratio reflects better financial health and the ability of the company to pay claims and meet future contingencies and business growth plans. Barring the solvency ratio of <keyword id="6369780" type="General" weightage="80" keywordseo="new-india-assurance" source="Orion">New India Assurance</keyword>, this key indicator of the three public sector general insurance companies stood below the regulatory requirement of 150 per cent. During 2019-20, the government infused Rs 2,500 crore in these three companies. It increased substantially to Rs 9,950 crore in the following year and Rs 5,000 crore in 2021-22. In all, the government infused Rs 17,450 crore into these insurance firms so far to improve their financial health. Public sector general insurance companies are undergoing various reforms, including organisational restructuring, product rationalisation, cost rationalisation and digitalisation. For efficient use of capital and to push profitable growth, the sources said, a set of key performance indicators linked reforms have been initiated by all public sector general insurance companies effective 2020-21, when the maximum capital infusion was made. Of the four state-run general insurance companies only New India Assurance Company is listed on the stock exchanges, the remaining three are wholly owned by the government. The government has already announced its intention to privatise one general insurance company. To facilitate privatisation, Parliament has already approved amendments to the General Insurance Business (Nationalisation) Act (GIBNA). Finance Minister <keyword id="129243" type="General" weightage="80" keywordseo="nirmala-sitharaman" source="Orion">Nirmala Sitharaman</keyword> in the Budget 2021-22 announced a big-ticket privatisation agenda, which included two public sector banks and one general insurance company. "We propose to take up the privatisation of two public sector Banks and one general insurance company in the year 2021-22. This would require legislative amendments," she had said.

Govt may infuse capital in PSU general insurers in Q4 based on performance

<ul><li>The strike has been called off following an agreement reached with the management of the companies.</li><li><keyword id="651724" type="General" weightage="80" keywordseo="clc" source="Orion">CLC</keyword> had further advised that the managements should consider the suggestions of the <keyword id="122605" type="General" weightage="80" keywordseo="associations" source="Orion">associations</keyword> positively.</li><li>The strike notice was given by Girish <keyword id="24716" type="General" weightage="80" keywordseo="khurana" source="Orion">Khurana</keyword>, National Convenor, JFTY protesting against the unilateral implementation of the EY recommendations.</li></ul> The unions in the government-owned general insurance companies and General Insurance Corporation of India Ltd (GIC Re) on Monday called off their January 4 strike, said an union leader. The strike has been called off following an agreement reached with the management of the companies at the conciliation meeting called by the Chief Labour Commissioner, Central. "Various arguments took place in the meeting from both sides and finally, the CLC advised the managements to give proper bilateral opportunity for discussion with the Associations within 15 days and take the suggestions," Trilok Singh, Convenor-North Zone, Joint Forum of Trade Unions and Association (JFTU), told IANS. He said the CLC had further advised that the managements should consider the suggestions of the associations positively. "Managements agreed to meet the Associations within 15 days for the same. In the light of these instructions from the CLC's office and the managements' decision, we have decided to defer the strike till further advices," Singh said. At the conciliation meeting, the management representative said since 2016 it has been a matter of existence for the insurers. They said even after infusion of capital by the government, the companies are struggling to survive. The companies have to maintain solvency ratio and for that, they have to cost effective. The representative of the Department of Financial Services also maintained that the insurers have to improve their performance. The strike notice was given by Girish Khurana, National Convenor, JFTY protesting against the unilateral implementation of the EY recommendations on rejigging the five reinsurers. The CLC had called the Chairman-cum-Managing Directors of the five companies, Joint Secretary, Department of Financial Services, and Khurana for a conciliation meeting. The unions have been demanding the copy of the EY report for a long time. The management had given them a copy of the power point presentation made to them about the EY report. "Bullet points contained in <keyword id="6678164" type="General" weightage="50" keywordseo="ppt" source="Orion">PPT</keyword> (powerpoint presentation) reveal no details and we are unable to submit our view-points and suggestions in the matter," Khurana said in a letter to <keyword id="14574026" type="General" weightage="50" keywordseo="suchita-gupta" source="Orion">Suchita Gupta</keyword>, <keyword id="15951458" type="General" weightage="50" keywordseo="chairperson-gipsa" source="Orion">Chairperson GIPSA</keyword> and Chairman-cum-Managing Director, <keyword id="15951459" type="General" weightage="50" keywordseo="national-insurance-earlier" source="Orion">National Insurance earlier</keyword>. SEE ALSO: <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/india/news/delhiites-guzzle-over-1-crore-liquor-bottles-worth-218-crore-from-dec-24-31/articleshow/96698044.cms">Delhiites guzzle over 1 crore liquor bottles worth ₹218 crore from Dec 24-31</a> <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/stock-market/news/zomato-irctc-zee-entertainment-among-stocks-in-focus-on-tuesday/articleshow/96697684.cms">Sensex, Nifty50 likely to open in red amid weak global cues; Zomato, IRCTC, Zee Entertainment among stocks in focus</a>

PSU general insurance unions call off their Jan 4 strike

The long pending wage revision talks between the General Insurers' (Public Sector) Association of India (GIPSA) and the various employee unions have begun in a bad taste. The talks were held on Wednesday. The GIPSA, the lobby body for the four government owned multiline non-life insurers and the General Insurance Corporation of India (GIC Re) made their offer that was expected to be rejected and the unions rejected the same. The wage revision for the public sector general insurance employees was due from August 1, 2017. "The GIPSA offered seven per cent hike on the wage bill (without any wage arrears from 2017) or five per cent wage hike with two per cent of arrears," Sanjay Jha, Secretary Standing committee (General Insurance, All India Insurance Employees Association-AIIEA), told IANS. Jha said the AIIEA and other unions have rejected the 'disappointing' offer. According to him, the Joint Forum of Trade Unions and Associations will hold demonstrations during the lunch recess demanding a respectable wage offer maintaining insurance sector parity. "The financial position of the companies in 2017 was good. There is no reason for the management to make such an offer. Perhaps it is done to delay the wage revision further," said Vijay Sharma, President, National Confederation of General Insurance Officers Association (CONFED) and All India President of New India Assurance Officers Association. Sharma said the employees expect at least a 15 per cent hike offer, similar to what was given to the employees of Life Insurance Corporation of India. SEE ALSO: <a href="https://www.businessinsider.in/thelife/personalities/news/pankaj-tripathi-could-have-been-a-politician-like-his-character-in-mirzapur/articleshow/92403253.cms">Pankaj Tripathi could have been a politician like his character in Mirzapur</a> <a href="https://www.businessinsider.in/business/ecommerce/news/recommerce-platform-cashify-raises-90-mn-in-its-series-e-funding/articleshow/92402742.cms">Recommerce platform Cashify raises $90 mn in its Series E funding</a>

PSU insurance unions angry with the 7% salary hike offer, seek LIC-like hikes

New Delhi, Apr 20 () Saluting the efforts of bankers to provide services amid coronavirus threat, the Finance Ministry on Monday said public sector banks (PSBs) have provided insurance cover to employees in case of an unfortunate death due to the deadly virus.Banks have also expressed their commitment to ensuring the well being of their employees by providing protective gear and medical care.statBanks have appointed dedicated doctors for its employees and also set up helpline to attend to the concerns of staff, sources said."Salute to all bankers providing services across India in this critical time. To ensure their safety, PSBs have provided health cover (incl of #Covid-19) to all employees and also lumpsum compensation in case of an unfortunate death due to #Corona," the Finance Ministry said in a tweet.According to sources, banks have designed their own customised product keeping in mind interest of their employees and up to Rs 20 lakh lumpsum amount will be paid to relative in case of unfortunate event due to COVID-19.Prime Minister Narendra Modi and Finance Minister Nirmala Sitharaman have praised bankers for imparting their duty in these challenging times.Financial services are part of some of the essential services which have been operational during the lockdown that will continue till May 3.Several banks including SBI, Punjab National Bank, Union Bank of India and Indian Bank have taken various steps to ensure safety of their employees and protect them from coronavirus.For example, the country's largest lender State Bank of India (SBI) has set up a quick response team to keep the staff motivated amid the coronavirus outbreak,The bank has set up a helpline number manned by doctors and psychologists to assist its staff and employees to deal with the coronavirus outbreak as well as stress and anxiety related to this, sources said. DP MR

PSU banks provide up to Rs 20 lakh insurance cover to employees

New Delhi, Feb 5 () The government aims to complete merger of three state-owned general insurance companies -- National Insurance Co Ltd, United India Insurance Co Ltd, and Oriental Insurance Co Ltd -- by the end of March, Finance Secretary Rajiv Kumar said. Respective boards of the three companies have already given their in-principal approvals for the merger. "Merger of PSU general insurers is at an advanced stage. We can see that happening quite soon. It is already before the Cabinet," Kumar told in an interview. Though the merger process was in the works, the government would take a call on listing the merged entity after the merger, he said. To facilitate the merger, the Budget has announced a capital infusion of Rs 6,950 crore into the three public sector general insurance companies (PSGICs) in the next financial year. This will help achieve requisite minimum solvency ratio by each of the three PSGICs, according to Budget documents. "A partial budgetary support has been made in RE 2019-20 through first batch of supplementary demands for grants and provision for further capital infusion is included. The provision is met from the National Investment Fund," it said. The government infused Rs 2,500 crore into the three insurers through first supplementary demands for grants for 2019-20 in December. In his Budget Speech 2018-19, then finance minister Arun Jaitley had announced that the three companies would be merged into a single insurance entity. However, the merger process could not be completed due to various reasons, including poor financial health of these companies. As on March 31, 2017, the three companies together had more than 200 insurance products with a total premium of Rs 41,461 crore and a market share of around 35 per cent. Their combined net worth was Rs 9,243 crore, with total employee strength of around 44,000 spread over 6,000 offices. In 2017, state-owned New India Assurance Company and General Insurance Corporation of India were listed on the bourses. The government had raised nearly 17,500 crore through initial public offerings in New India Assurance Co Ltd and General Insurance Corp of India Ltd, the only listed state-owned non-life insurance companies. With an aim to protect interest of depositors of cooperative banks, he said the government would amend the Banking Regulation Act to avoid repeat of PMC Bank type of fraud. "These cooperatives also play an important role in last-mile agriculture credit. So, while we need to allow them to continue to work, at the same time, if you are in the business of banking, if you are taking depositors' money, you need to follow the same rigour and robustness of the banking system," he said. Under the Banking Regulation Act, the Reserve Bank of India (RBI) regulates and supervises the banking functions of urban co-operative banks, but their administrative control is with the Registrar of Co-operative Societies. Regulatory lacunae in co-operative banks have come to the fore after a whistle-blower complained to the RBI about financial irregularities at Punjab and Maharashtra Co-operative Bank, which is now under an administrator appointed by the central bank. DP Md

Govt to finalise PSU general insurers' merger by March-end: Finance Secretary

New Delhi, Feb 12 () The Union Cabinet on Wednesday gave an in-principle approval to pump in Rs 2,500-crore capital into three public sector general insurance companies.These three insurers are Oriental Insurance Company Limited (OICL), National Insurance Company Limited (NICL) and United India Insurance Company Limited (UIICL).The Cabinet has allowed "immediate release of Rs 2,500 crore in the light of the critical financial position and breach of regulatory solvency requirements" of these general insurers", an official statement said.Briefing reporters here, Union Minister Prakash Javadekar said the capital has been infused in the light of the critical financial position and breach of regulatory solvency requirements of the general insurers.The capital infusion in these companies comes ahead of their proposed merger by the end of March 2020.Earlier in January, the finance ministry had said that the merger of PSU general insurers was at an advanced stage and that could happen soon as the matter was pending before the Cabinet.In his Budget speech 2018-19, the then finance minister Arun Jaitley had announced that the three companies would be merged into a single insurance entity.However, the merger process could not be completed due to various reasons, including poor financial health of these companies.As on March 31, 2017, the three companies together had more than 200 insurance products with a total premium of Rs 41,461 crore and a market share of around 35 per cent. NKD KPM MKJ

Govt okays proposal to infuse Rs 2,500 cr into 3 PSU general insurers for improving financial health

<ul><li>Five years on, their combined market value increased by ₹2.2 trillion, which is significantly lower than the invested value </li><li>Nine of 19 PSBs reported current value of investment higher than the investment amount. </li><li>This year, the central bank has cut interest rates thrice by a net 100 basis points or 1% (before this week’s rate cut), but banks passed on only 29 basis points of this benefit to customers. </li></ul> The Government of India and the country’s largest insurer LIC made a losing bet on Indian public sector banks (PSBs). In the last five years, both of them invested a massive ₹3 trillion into 19 such banks. Five years on, their combined market value increased by ₹2.2 trillion, which is significantly lower than the invested value, said a report by India Ratings and Research. “Nine of 19 PSBs reported current value of investment higher than the investment amount. The key banks among them are Indian Bank, State Bank of India, Bank of Baroda,) and Canara Bank,” said the report. A large chunk of the market value contribution, by around 53% came from the country’s largest bank, SBI. When the government kicked off its ‘Indradhanush’ (meaning Rainbow) plan to recapitalise banks, they were not looking out only for a return on their investment. They also wanted banks to push credit growth in a country where growth has been slowing down. The Quicksand Unfortunately, loss-ridden banks with toxic loans dragging them down, could neither help themselves nor consumers, and definitely not the country’s economy. “In reality, the capital infused was largely consumed to tide over losses resulting from provisions required on non-performing assets,” the report said, calling it a quicksand. This has been the case with Reserve Bank of India’s (RBI) interest rate cuts as well. In the last one year, the central bank has cut interest rates thrice by a net 100 basis points or 1%, but banks passed on only 29 basis points of this benefit to customers, swallowing most of it to fill their own money pit. This month, the central bank cut interest rates by another 35 basis points and promised to take “<a href="https://www.businessinsider.in/business/rbi-policy-update-asks-banks-to-cut-lending-rates/articleshow/70567837.cms">whatever steps necessary </a>to make banks pass them on”. Kickstarting the economy Like the government, RBI also wants to push for growth, as it predicts that it will fall top 6.9% this year, below their earlier estimates. Yet, helping banks to ensure <a href="https://www.businessinsider.in/business/india-gdp-growth-may-fall-below-7-says-crisil/articleshow/70481459.cms">growth is </a>not a strategy that is working. Whatever little credit growth that India saw came from private and foreign banks, shadow banks and mutual funds. In fact, the share of state-owned banks in total loans fell from around 61% to 46.5%, in the last five years in spite of government support. India Ratings suggests that PSBs should look at management overhaul, lengthen the tenure of top management, bringing in private sector leaders and link their pay with stock performance. “Without structural reforms in place, the government will have to continue to inject capital into banks in times of stress, which will strain its own finances and hinder efforts for fiscal consolidation,” the rating agency said.

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Govt may infuse capital in PSU general insurers in Q4 based on performance

PTI

PSU general insurance unions call off their Jan 4 strike

IANS

PSU insurance unions angry with the 7% salary hike offer, seek LIC-like hikes

IANS

PSU banks provide up to Rs 20 lakh insurance cover to employees

PTI

Govt to finalise PSU general insurers' merger by March-end: Finance Secretary

PTI

Govt okays proposal to infuse Rs 2,500 cr into 3 PSU general insurers for improving financial health

PTI

Indian government’s ₹3 trillion gift to banks ended in a money pit

Katya Naidu

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