Page 6 - Insurance Times July 2019

Bharti AXA General Insur- Merger of 4 state-owned insurance cos can fetch gain,
ance records 29% growth sees employees
Most employees prefer merging of tional Insurance and Oriental Insur-
in FY19
four state-owned general insurance ance and subsequent takeover by New
Bharti AXA General Insurance has re-
companies, said India Assurance,
ported a
their representa- the strongest of
2 9 %
tives as govern- the four compa-
gr o w t h
ment plans to nies.
in the fi-
take a step
nancial "We have been
ahead with the
y e a r advocating the
option of merger.
2018-19 merger of all the
Seeing the de- four companies at
ahead of the industry growth rate.
clined market one go. A takeover
An increase of 29% in its gross writ-
share of National would mean un-
ten premium (GWP) to Rs 2,285
Insurance, Oriental Insurance, United equal terms of employment," said
crore in the financial year 2018-19
India Insurance and New India Assur- Govindan.
from Rs 1,772 crore in 2017-18 has
ance than the private companies for
been registered by the company. "From the company's point of view it
the first time in the last financial year,
makes more sense to merge the three
A release has stated that the growth employee unions of the state-owned
(National Insurance, Oriental Insur-
is driven across all product segments companies say a merger will end com-
ance and United India) but from the
and all channels of distribution. A petition among them and help them
shareholder's point of view, any time
top line performance has been reclaim their market leadership.
it makes more sense to merge all four.
achieved by the company against an
The share of all public sector general There are question marks as to
overall industry growth of 12.9% and
insurance companies recorded whether these there who are sup-
private sector growth of 25% in the
45.35%, whereas the share of private posed to merge into one make a
financial year ended in March 31.
companies stood at 54.6% in FY19, as healthy company as they have been
Strong premium growth at more per the data from IRDAI. struggling with their financials. And it
than double of industry growth is going to be tough to create a healthy
As state-owned companies struggled
helped the company post a net organization and maximize sharehold-
with understaffed offices and capital
profit of Rs 3 crore in the financial ers profit by merging the three," said
constraints, the private sector gained
year, against a loss of Rs 92.6 crore Ashvin Parekh, MD Ashvin Parekh
a sizeable market share in the last two
during 2017-18, added the release. Asdvisory Service.
years through schemes like Prime Min-
"We are happy to notch up the first- ister Fasal Bima Yojna and Ayushman, In accordance with a top official of a
ever full-year profitability and grow the flagship crop insurance and health public sector general insurance firm,
faster than the industry in the finan- insurance schemes of the government. the merger of four companies would
cial year 2018-19. This has been pave the way for optimum utilization
"The merger of all the companies
achieved by expanding the distribu-
would be a better idea than merger of of a large workforce of public sector
tion network, adding number of
three, as it will become a strong entity companies and their integration with
strategic distribution partnerships
and after capital infusion will be able digital capabilities to penetrate into
and business alliances and diversifi-
to underwrite big businesses," said A rural areas. Keeping the merger plans
cation of product lines.
E Shantakumar, president of United in view, the government had earlier
We will continue to focus on chan- India Insurance Officers Union. instructed the companies to restruc-
nel and segment diversification, pro- ture their business, clean up balance
K Govindan, general secretary of the
ductivity and prudent expense man- sheets and optimally utilize the
General Insurance Employees' All India
agement to drive growth in years to workforce, said the official.
Association, said his union, which does
come," said MD and CEO, Bharti AXA
not include officers, is against the The financial condition of United India
General Insurance, Sanjeev
merger through a take-over route: Insurance, National Insurance and Ori-
Srinivasan.
merger of United India Insurance, Na- ental Insurance is also worrisome.
6 The Insurance Times, July 2019