New Delhi, Feb 8: PSU general insurers merger likely to take 4-6 months; boards to discuss valuation & staff management
The merger of the three public sector general insurance companies, as announced in the Budget 2018, is likely to take 4-6 months. Sources close to the development said that the respective boards of the insurance companies will meet to discuss the contours of the proposed merger.
In his Budget speech on February 1, Finance Minister Arun Jaitley said that the three state-owned insurance companies, National Insurance, Oriental Insurance and United India Insurance will be merged and subsequently listed on the exchanges as a single entity.
“We only have the official announcement and will work with our respective teams. This could take at least five to six months,” said an official from one of the companies that will be part of the merger.
Once the respective boards meet, external consultants will be appointed to decide on the valuations. Initial estimates suggest that this will be the largest non-life insurance company valued at about Rs 1.2-1.5 lakh crore.
“Human resource management is another critical aspect that needs to be looked into. Each of us has an average staff strength of 14,000-16,000 and the combined entity will at least have to let go of 4,000-5,000 people. We have to discuss with the boards to see if a voluntary retirement scheme (VRS) can be provided,” another official added.
These insurance companies also have very strong worker unions who will have to be taken into confidence before a decision is taken on the staff retention or dismissal.
Sources said that the government also wants most of the employees to be absorbed into relevant departments in insurance companies or services in the public sector.