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IRDA Draft Guidelines Mandates 10 Yr Operations For Life Insurers' IPO

22 June, 2011

Life insurance firms would need to complete at least 10 years of operations before they can consider floating a public issue, the country’s insurance regulator has said in its draft guidelines and has also sought views of stakeholders by the end of this month.

The eligibility criteria in the proposed guidelines would also require an insurance company to have maintained the prescribed regulatory solvency margin at the end of the preceding six quarters.

Insurance Regulatory & Development Authority (IRDA) has also said, “No issuance and allotment of capital by an insurance company shall be in any form other than as fully paid-up equity shares.”

IRDA has said such insurance firms looking to go public would need to first approach the regulator for its ‘formal approval.’ IRDA will consider the applicant company’s overall financial position, the regulatory record and the proposal for issue of capital, prior to giving its ‘formal approval’ to the proposal.

Certain sections of the eligibility criteria for IRDA approval need further clarifications such as the proposed clause that the insurance company should have embedded value of at least twice the paid-up equity capital.

IRDA has also sought additional disclosures from life insurers, in addition to what is mandatory under the norms set by capital market regulator SEBI. In particular, life insurers will need to disclose risk factors specific to the insurance companies, besides meeting other routine disclosure policy.

 


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2 Comments
raj kumar . 6 years ago

if the companies comes in IPO they have to ensure their investors return on their equity and also dividend payments. the companies are new and even not achived BEP, in such situation how IRDA will look into. Insurance is for the benefits of policyholders in the event of some misshapen.Is there any probability of poor claim settelments. what is IRDA’s say on this.

vijay kumar . 6 years ago

it is true that insurance companies have not reached break even point but it is also true that there is possibility of poor settlement issues but one must be ready to change and only change is constant in fact IPO will make companies more focus on profit, better operations and good customer services will emerge which is not present right now.

The writer is Regional Head Sales& investments with Bombay Finance Pvt ltd.

IRDA Draft Guidelines Mandates 10 Yr Operations For Life Insurers' IPO

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