Capital injection for 3 public insurers seen as positive for credit

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The government’s decision to inject capital into the three state-owned general insurers is good for credit, Moody’s Investors Service said.

“The Finance Ministry’s decision to inject INR 5,000 crore ($655 million) of additional capital into state-owned companies National Insurance, Oriental Insurance and United India Insurance is positive in terms of credit, as their capital is increasing. is significantly depleted after several years of loss-making underwriting,” said Mr. Mohammed Ali Londe, Vice President, Financial Institutions Group, Moody’s Investors Service.

Given the injections over the past few years, the government’s increased focus on the profitability of these insurers will help maintain the improvement in their capital and risk management, Londe added.

Hike in Authorized Capital

The Ministry of Finance, through a notification, has enhanced the authorized share capital of the three public sector general insurance companies to allow for a capital injection of INR 5,000 crore. Of this amount, INR 3,700 crore is infused into National Insurance, INR 1,200 crore into Oriental Insurance and INR 100 crore into United Insurance. All three insurers are loss-making, and the government has considered various strategies to straighten out their finances, including a possible merger in the past.

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