BackIrdai issues draft guidelines for mandatory listing of insurance firms
The Irdai says insurance firms having completed 8 years of operations in general and reinsurance, and 10 years in life insurance, can go for mandatory listing
Premium
New Delhi: The Insurance Regulatory and Development Authority of India (Irdai) on Thursday released a discussion paper on listing of Indian insurance firms.
The Irdai proposed that insurance firms having completed eight years of operations in case of general and reinsurance, and 10 years of operations in case of life insurance, can go for mandatory public listing.
As per the regulatory framework in place, a insurance company can get its shares listed through an offer-for-sale (existing promoters can unlock value) or through a public issue for meeting capital requirements.
The discussion paper titled ‘Listing of Indian Insurance Companies’ stated that all general insurance companies, including standalone health and reinsurance, shall take steps to get their shares listed on completion of eight years of operations.
All life insurance firms shall take steps to get their shares listed on completion of 10 years of operations, it said, adding all companies which have already exceeded the number of years of operations shall initiate steps to ensure that they get their shares listed within three years from the date of issue of directions under these guidelines.
“Thus, all Indian insurance companies which meet the above said criteria shall take up the matter of listing to their Board of Directors within three months from the date issue of these Guidelines," the Irdai said.
The firms can file the road map for their initial public offering approved by the board of directors with the authority within 45 days from the date of approval by the board, the Irdai said.
As at July 2016, there were 55 insurance firms operating in India, of which 24 were in the life insurance business and 30 were in non-life insurance business.
General Insurance Corp. of India (GIC) is the sole national reinsurer. Of the 55 companies currently in operation, eight are in the public sector, of which two are specialized insurers—Export Credit Guarantee Corp. of India Ltd (ECGC) and Agriculture Insurance Company Of India Ltd (AIC).
One is in life insurance, namely Life Insurance Corp., and four are in non-life insurance and one in reinsurance. The remaining 47 companies, including standalone health insurance firms, are in the private sector.
“As on date, despite being hugely capitalized all of these companies are closely held. As a result, the need for providing capital to meet both the capital and solvency margin requirements rests on the promoters of these entities," the Irdai said.
It said 32 insurance firms in life and general, including specialized insurers and reinsurer firms, have completed 10 years of operations. Of these only two life insurers have applied for getting their shares listed on the stock markets, the Irdai said.
Unlock a world of Benefits! From insightful newsletters to real-time stock tracking, breaking news and a personalized newsfeed – it's all here, just a click away! Login Now!
