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The ministry recently sought approval from the Parliament for an additional requirement of funds for recapitalisation of insurance companies of Rs 2,500 crore through demand for grants. The three firms needed immediate recapitalisation of at least Rs 2,000-3,000 crore each to maintain solvency ratios and reduce losses. The total requirement is up to Rs 12,000 crore.The public sector general insurance firms had told the department of financial services of the urgency for immediate recapitalisation in order to maintain the regulatory solvency ratio and wipe out losses. Though this fund may be insufficient for the urgent needs, still the insurance PSUs will get some recap funds which will slightly improve their vital stats, said official sources.Recently Finance Minister Nirmala Sitharaman had said government would move forward on the merger of PSU insurance companies. "This was a Budget announcement and I will be moving forward on that", she said in a media interaction about a query on the status of the Budget announcement on the merger of the three general insurance companies", she had said.The proposed merger of National Insurance Co Ltd, United India Insurance Co Ltd and Oriental Insurance Co Ltd has not been able to move forward due to their weak financial position, official sources said. Since the Budget 2019-20 did not make any provision of funds for insurers, the department of financial services (DFS) will have to seek supplementary demand of Rs 12,000 crore for this purpose, sources said.But Finance Ministry had made a request for Rs 2,500 crore. General insurers have sought around Rs 2000 crore-Rs 3000 crore each for avoiding falling below solvency ratio, sources said. The three insurers have struggled to maintain the minimum required solvency ratio of 1.5 in recent years.According to the guidelines of Insurance Regulatory and Development Authority of India, general insurance companies need to maintain a minimum solvency ratio of 1.50. As on March 31, 2019, the solvency ratio of National Insurance Co was 1.04 and for Oriental Insurance Co it was 1.57, while solvency ratio for United India Insurance, as on March 31, 2018, was 1.54.Oriental Insurance has posted a net loss of about Rs 142 crore in the first quarter of this financial year. At the end of Q4 of the previous financial year, its solvency ratio stood at 1.57. United India Insurance's solvency ratio stood at 1.52 at the end of last financial year, although it was profitable. National Insurance's solvency ratio stood at 1.55, and its net losses touched Rs 2,170 crore. The insurers have appointed management consultant firm E&Y to draw up a roadmap for merger.( With inputs from IANS )

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