National Insurance IPO Can Hit Market By Q4 2017-18:
As per latest update National Insurance IPO can hit market by last quarter of current financial year or by first quarter of next financial year.
State-run National Insurance Company has approached the government for approval to list the company on the stock exchanges, after cleaning up the balance sheet in the last financial year, improving solvency margin to 1.90 from 1.26 in the previous year.
“We have approached the government for an IPO,” said K Sanath Kumar chairman and managing director National Insurance Company. “We are looking to list the company by last quarter of this financial year or first quarter of next financial year.”
Earlier this year, the government had approved dilution of up to 25% equity stake in the five companies in tranches. New India Assurance and General Insurance Corp, have appointed bankers for the proposed issue.
National Insurance has reported net profit before tax of Rs 49 crore in 2016-17 against Rs 150 crore in financial year 2015-16. The profits have been lower as it made provisions towards reserve requirement of incurred but not reported third party motor portfolio.
Recently, the regulator had terminated the membership of mentor actuary of the company for under-reserving, which has resulted in the shortfall of Rs 4,263 crore in the reserve for future provisioning in the financial statements of the insurer as on March 31, 2016.
“We have to make additional provisions of Rs 2,771 crore in the next two years,” said Kumar.
It managed to shore up the solvency above the stipulated limit of 1.50 by staying away from loss making businesses, writing more crop insurance and using the regulatory dispensation. The solvency margin is calculated on book value, while if calculated on fair value it would be more than 1.9, said Kumar. The company had raised Rs 893 crore through subordinated, that helped it to grow the business and manage solvency.
The Kolkata based insurer had reduced its exposure to loss making group health policy. “We have brought down our group health exposure by nt writing over 116 policies,” said Kumar. “The focus would be to bring the retail -corporate mix to 60:40 from 65:35 at the moment.”
The net worth of the company has improved to Rs 9,544 crore from Rs 8,764 crore. It grew the premium income by 18.8% to Rs 14,282 crore at the end of the financial year.
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While Au Financiers IPO Grey Market Premium (AUFIL GMP) also started trading at Rs 88 – Rs 90 per equity
Some SME IPO will also be active in market in coming week.
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