Cabinet Approval: Capital Infusion in three public sector Units OICL, UIICL and NICL

On February 12, 2020, the Union Cabinet approved on capital infusion in three Public Sector Units namely United India Insurance Company (UIICL), Oriental Insurance Company Limited (OICL) and National Insurance Company Limited (NICL).

Highlights

During the meet the cabinet also approved an immediate release of Rs 2,500 crores in order to address their critical financial position and also regulate their solvency requirements. The capital infusion is aimed at merging the three insurance companies in the future. Merging the companies will improve their operational efficiency and solvency ratio.

The step is being taken to make these companies meet the solvency ratio criteria of IRDA (Insurance Regulatory Development Authority)

Solvency Ratio

The Solvency ratio is the key metric used to measure the ability of an enterprise to meet its debt obligation. It indicates if a company has sufficient cash flow in order to meet its long term and short-term liabilities.

It is the ratio between after-tax net operating income and total debt obligations.

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