BENGALURU: The public sector insurance companies have continued to dominate the insurance market, enjoying over 90 percent of the market share. FDI is the process whereby residents of one country acquire ownership of assets for the purpose of controlling the production, distribution and other activities of a firm in another country. Higher foreign limit in insurance could unlock value, according to a report by Goldman Sachs, a global investment bank, says yahoo.com.

Perspective of an Investor:

Now Goldman Sachs has upgraded the target prices for many insurance stocks as it expects a faster growth. It raised its valuation for the 12-month target price for Bajaj Finserve by 21 percent to Rs 1170, taking into account the latest growth numbers. About 40 percent Bajaj Finserve’s value comes from its life insurance business and 26 percent from its general insurance business.

Employees Should Be Given Equal Liquidity:

Employee Stock Ownership Plan (ESOP) plans are also given to employees by their insurers for their own flexibility. ICICI Life and HDFC Life are some of the banks which are tied up with insurers. Whenever such stock options are given, they can be monitored by the employees. The listing of subsidiaries of foreign holding will allow the ESOPs to be liquidated as well.

Inflow of Foreign Investment:

The inflow of capital can help take off the pressure from the promoters of the parent companies. Insurance is a very capital intensive sector, for example, ICICI Prudential Life, a subsidiary of ICICI Bank. The stake in the insurance companies that the foreign partners have, has gone to 49 percent from just 26 percent. This is a hike of a full 23 percent.

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