Global rating agency AM Best, which focuses on insurance sector, has downgraded 3 public sector companies – National Insurance, United India Insurance and Oriental Insurance – reflecting deterioration in their operating performance and underwriting losses.
These companies may require around Rs 5,000 crore recapitalisation to meet the regulatory standards, experts said. “Having decided to merge the three insurers, will it not be in the owner’s (the government) interest to capitalise the three and keep them solvent till the merger takes place? The capital infusion required may be just some Rs 5,000 crore which is indeed small compared to the Rs 70,000 crore reportedly given to PSU banks,” said former IRDAI Member KK Srinivasan.
