Page 31 - Insurance Times March 2021

Divestment of One
PSU General Insurer

in FY22
Finance Minister announced
the strategic divestment of
one government-owned
general insurance company in
the next fiscal year. The
name of the public-sector
insurer that will be on the
privatization block was not
disclosed. It is among a group
of several state owned
LIC IPO to be a game changer companies operating in various sectors which will be
privatized. The government think tank NITI Aayog is to be
In the first paperless Union Budget, among other proposals
asked to work on the next list of central public sector
mentioned in the Budget that pertain to the insurance
companies for disinvestment.
industry, Finance Minister stated that the IPO of the
country's biggest life insurer, Life Insurance Corporation of
India (LIC) will be completed in the fiscal year ending 31 There are four state owned general insurance companies:
March 2022 (FY2022). The much-anticipated IPO for LIC will New India Assurance, United India Insurance (UII), National
make the life insurer one of the largest companies in India Insurance Company (NIC) and Oriental Insurance Company
(OIC). The government had earlier dropped its plan to merge
in terms of market capitalization. LICI's IPO plan was
UII, NIC and OIC and decided to recapitalize them. For some
announced in the Budget last year and the groundwork for
years now, the government has been divesting some of its
the flotation has begun. The government hopes that the interests in the insurance sector. The government divested
listing would bring discipline to the market and also give retail
investors an opportunity to participate in wealth creation. close to 15% stakes in both New India Assurance and
national reinsurer GIC Re in 2017. This entire plan is part of
the government disinvestment programme. The
LIC, which was set up in 1956, has assets close to $433bn.
State-run Life Insurance Corporation dominates India's life government budgeted Rs. 1.75 lakh crore from stake sale
insurance market, but private players have rapidly grown in public sector companies and financial institutions in the
in size. The imperativeness of the life insurance sector in the fiscal year 2021-22. For the previous fiscal year, the
economy has gained paramount importance in the government had proposed Rs. 2.10 lakh crore to be raised
from disinvestment. However, the Covid-19 pandemic
aftermath of COVID. The Central government had
impacted the government's plan and the target for
announced the stake sale in the LIC during Budget 2020- disinvestment has been lowered to Rs. 32,000 crore in the
21. Meanwhile, the government has already initiated the
process for LIC IPO. Currently, the government owns the revised estimates. The legislation amendments will be
entire 100 per cent stake in LIC. introduced in this session.
The road map for overhauling public
sector enterprises with the
announcement of the broad details of
the privatization policy classifies CPSEs,
banks, and insurance companies into four
strategic areas -atomic energy, space,
and defence; transport and telecom;
power, petroleum, and other minerals;
and, banking, insurance and financial
services. In all other sectors, PSUs will be
either privatized or closed. There were

The Insurance Times, March 2021 31