The center will put the merger plan on hold, and the three weak general insurance company postal profit

These three companies – India Insurance, Oriental Insurance and National Insurance – are the weakest of four state-owned general insurance companies. But they posted profits in the first nine months of fiscal 25, which was a loss after years of losses.

United India reported profits ₹2.745 billion, Oriental Insurance ₹36.837 billion and national insurance ₹This period was 294.6 million. The fourth company, New India, is guaranteed to be the strongest of the quartet.

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As the government set out to monitor possible decisions for next year, all three have been told to focus on profitability rather than revenue growth.

The above-mentioned person said that if insurers remain profitable by fiscal 26, options such as mergers or even privatization could be revisited. Potential mergers may involve the integration of three entities and their subsequent merger with the stronger New India guarantee.

The first person mentioned above said: “The weaker general insurance companies showed improvements in performance in FY25, with all three posting profits in the first nine months.

“Privatization of an insurance company is also being considered. However, no formal policy decision has been made,” the above person said.

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Focus on the edge

Meanwhile, the three insurers have been instructed to focus on profitable businesses and prioritize the pursuit of profit margins for revenue growth.

“The focus is now on underwriting discipline, cost control and better risk assessment to ensure sustainable profitability,” the person said.

At a recent event, Minister of Financial Services M. Nagaraju said that no decision to merge PSU insurance companies has been made and that the government will announce its policies upon finalization.

At the time of publication, email inquiries sent to the Ministry of Finance have not been answered.

A spokesperson for United India Insurance, Oriental Insurance, National Insurance and New India Guarantee did not respond to questions from the email.

Ironically, the merger talk in the general insurance field of public sector has become bigger as the performance shown by these historically lost entities has improved.

Oriental and Nationals posted profits from fiscal 24 and fiscal 25 respectively, while United India made profits in the third quarter after a seven-year gap of seven years.

However, their solvency position is still weak.

As of December 31, 2024, United India’s solvency ratio was -0.91, Oriental Insurance was -1.05, and National Insurance was -0.53, lower than the minimum order of regulators. Solvency ratios indicate that liabilities exceed assets, which raise concerns about financial stability.

“As we have seen in the banking industry in India, there is already a business case that integrates a poorly performed bank with leading performers. In such a merger, leading performers can support the acquired business with an overall benefit of unlimited customers and shareholders,” he said.

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He added: “But when you merge two under par performers, you won’t get that benefit. It will eventually become a much more inefficient company. The way to go should be to provide these companies with buyers through a competitive bidding process in order to ensure the financial conservative attitude of the taxpayer for the greater good of the company, employees, customers, and to ensure the taxpayer’s financial conservative attitude.”

The government earlier proposed to merge the three into one entity and list them on the stock exchange.

It also considers whether one of these three people can be privatized or whether the combined entity itself can undergo fair dilution.

At the time Finance Minister Arun Jaitley announced the merger plan in 2018. But it stagnates as insurers continue to cause losses and remain weak in solvency ratios.