National Insurance Co on Wednesday said it would formally start the formal process for its planned initial public offering (IPO) soon. The state-run insurer, in a press conference, said it has written to the government for the approval of the IPO, and plans to hit the markets in the current financial year. National Insurance’s net worth during the financial year 2016-17 stood at Rs 9,544 crore as against Rs 8,764 crore in 2015-16. Sanath Kumar CMD of National Insurance, said, “We have written to the government for the approval of IPO. The next few steps include meeting with the Department of Investment and Public Asset Management (DIPAM) to discuss the issue regrading the IPO. However, as of now, we have not decided what kind of stake sale we would be looking or even the amount which we can raise from the IPO.”
He also added that the company had a bad 2015-16, with its solvency margin plunging below the required levels, bounced back with a solvency margin of 1.90 in 2016-17 as against 1.26 in 2015-16, while 1.50 is the required level by the Insurance Regulatory and Development Authority of India (Irdai).
In mid-January this year, the Cabinet Committee on Economic Affairs (CCEA) had approved listing of the five state-owned general insurance companies and reducing the governments stake in them from 100% to 75%. The New India Assurance, The Oriental Insurance, National Insurance, United India Insurance and General Insurance Corporation of India or GIC Re are the five companies that will list on stock exchanges. GIC Re and New India Assurance are two players which have already appointed merchant bankers to manage their IPOs.
National Insurance’s total premium stood at Rs 14,282 crore in 2016-17 as against Rs 12,019 crore in 2015-16. While it reported profit before tax (PBT) at just Rs 49.20 crore in the last fiscal, down by 67% against Rs 150.47 crore in FY16. With its solvency margin below 1.5, National Insurance adopted unique steps to shore up its capital adequacy by going for subordinate debt of
Rs 895 crore and a special reinsurance arrangement with GIC Re in Health & Motor segment. The Debentures were oversubscribed. National Insurance cut down its presence in group health insurance and stopped more than 100 loss making policies during the year. It could increase the prices of many large policies to optimum levels.
National Insurance is aiming at a premium of Rs 16,000 cr in 2017-18 with complete capital adequacy and financial strength.