The government is considering privatisation of United India Insurance and General Insurance Corporation as per reports on Thursday.
Accordingly, shares of the two listed state-owned insurance companies, were locked in the upper circuit of 20 per cent on the BSE.
Shares of New India Assurance Company were reportedly at 164.20 whereas that of General Insurance Corporation of India or GIC Re at Rs 170.90.
Moreover, the Budget 2021 speech was targeted at government for taking up two public sector banks and one general insurance company for privatisation in FY22.
As on December 31, 2020, the government held 85.78 per cent stake in GIC RE, and 85.44 per cent in the New India Assurance Company respectively.
GIC Re being the largest reinsurer in the domestic reinsurance market in India leads most of the domestic companies’ treaty programmes.
Meanwhile New India Assurance Company is the largest general insurance company in India.
Further, GIC Re has recorded it’s net profit which is estimated to be of Rs 987.42 crore in the quarter ended December 2020.
However, it has shown an estimated loss of Rs 1,069.64 crore in the year-ago period.
Due to non availability of sellers, many buy orders of 428,130 shares were pending.
At present, both GIC Re and New India Assurance are trading below their respective issue price on the BSE, declined by 63 per cent and 58 per cent, respectively.
The government expects Rs 1 trillion to come from divestment of its stake in public sector banks and financial institutions out of it’s Rs 1.75 trillion divestment target.
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