The finance ministry is considering providing capital infusion to three loss-making public sector general insurance companies (PSUs) – National Insurance Company Limited, Oriental Insurance Company Limited, and United India Insurance Company – in the fourth quarter of the current financial year.
The decision will be based on the financial performance of the PSUs in the first nine months of the year.
The government is also reviewing the impact of the restructuring initiatives undertaken by the PSUs on their profitability and solvency margin.
The solvency margin is the extra capital that insurance 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 the three PSUs.
The government has been infusing capital into the PSUs to improve their financial health and help them meet the regulatory solvency requirement of 150%.
The government has also announced its intention to privatise one general insurance company.