NSE IPO can unlock Rs 12,000 crore for PSU insurers, boost solvency

Mumbai: The potential listing of National Stock Exchange of India is expected to significantly strengthen the solvency position of at least three state-run general insurers that together own about 75 million shares in the country’s biggest bourse.

The stakes of National Insurance Company, Oriental Insurance Company and United India Insurance Company, at NSE’s conservative listing price of ₹1,500 a share, would translate into ₹11,500 crore-12,000 crore for the insurers – or about ₹4,500 crore each.

The money could improve solvency ratios by nearly one percentage point. “This could improve solvency ratios by nearly 100 basis points, effectively equivalent to a capital infusion of similar scale,” said a person familiar with the matter.

These insurers are currently operating below the regulatory solvency mandate of 1.5 times the required solvency margin. As of March 2025, National Insurance reported a solvency ratio of -0.67, Oriental Insurance stood at -1.03 and United India Insurance at -0.65, which showed sustained stress on their balance sheets.

The ratios have weakened over time, with National Insurance at -0.46 and United India at -0.73 as recently as June 2024.

In contrast, listed peer New India Assurance has maintained a solvency ratio of about 1.9, comfortably above regulatory norms.

However, a listing of NSE could partly offset these capital needs. The insurers hold sizeable stakes in the exchange, which are currently carried at conservative valuations due to its unlisted status. A public listing would allow these holdings to be marked closer to market value, unlocking significant capital. The pressure on solvency stems largely from weak underwriting performance and persistent losses, particularly when excluding fair value gains. According to ICRA Ratings’ previous report, the three insurers may require ₹15,200-17,000 crore of capital to meet the 1.5 solvency threshold.

There were reports that the government was considering a fresh capital infusion of up to ₹5,000 crore into the three loss-making insurers.

The proposed IPO, estimated to raise over ₹20,000 crore, is expected to be entirely an offer-for-sale, with existing shareholders diluting stakes rather than the exchange issuing fresh equity.