National Insurance Company plans IPO

National Insurance Company has joined other national companies to tap the capital markets through an initial public offering. The company has approached the regulator seeking permission to move through the IPO process. The move follows a clean-up of the company’s balance sheet, which has resulted in its solvency margins improving from 1.26 to 1.9 times the statutory requirement.

The insurance regulator requires that companies maintain a solvency margin of 1.5 times of what is mandated. If the margins fall below 1.5, the company is placed under watch.

Market leader New India Assurance and the national reinsurer GIC Re have already firmed up their IPO plans, having shortlisted merchant bankers. As part of clean-up operations, the company had reduced its exposure to loss-making group health insurance business and motor insurance. It had also freed up capital locked in reserves for outstanding claims by entering into negotiated settlements with motor accident claimants. During FY17, the company generated premium income of INR14,282 crore — an increase of 18.8 percent from the previous year.