Shares of New India Assurance Company (NIA) and General Insurance Corporation of India (GIC) surged 20 percent each on Friday, extending gains from the previous session on reports of privatisation. As per a media report, the government is mulling privatisation of United India Insurance and General Insurance Corporation.

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The New India Assurance Company rose 20 percent to hit its 52-week high of Rs 196.80 per share on the BSE, while the General Insurance Corporation also rallied 20 percent to Rs 205 apiece. Both stocks were also hit their respective 20 percent upper circuit in the previous session. GIC and NIA have advanced 44 percent each in just 2 sessions.

According to an Economic Times report, the finance ministry, and the government's think-tank Niti Aayog will jointly finalise the general insurer that will be considered for privatization.

“Privatisation of GIC Re will only happen if the government decides to exit the reinsurance business and that assessment will be done in consultation with Niti Aayog,” the report stated.

The government holds an 85.78 percent stake in GIC RE as per the December quarter data while its holding in NIA stands at 85.44 percent till Q3.

In the Budget 2021 speech, Finance Minister Nirmala Sitharaman had said that the government will divest in two state-run banks, one general insurance company to fulfill the divestment target which stands at Rs 1.75 lakh crore.

Of that, the government expects Rs 1 lakh crore to come from the divestment of its stake in public sector banks and financial institutions.

GIC Re is the largest reinsurer in the domestic reinsurance market in India and leads most of the domestic companies' treaty programmes and facultative placements. The New India Assurance Company, meanwhile, is the largest general insurance company in India.