Insurance regulator issues draft guidelines for public listing

Insurance sector regulator IRDAI on Thursday proposed that insurance companies having completed 8 years of operations in case of general/re-insurance and ten years of operations in case of life insurance can go for mandatory public listing.

As per the regulatory framework in place, the insurance company can get its shares listed through and offer for sale (i.e., the existing prompt unlock value) or through a public issue for meeting the capital requirements, IRDAI said in a discussion paper on 'Listing of Indian Insurance Companies'.

All general insurance companies, including the standalone health and reinsurance, shall take steps to get their shares listed on completion of eight years of operations, it said.

All life insurance companies 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 a period of 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," it said.

They can file the roadmap for IPO duly approved by the Board of Directors with the authority within 45 days from the date of approval by the board, it said, adding initiate action for IPO in accordance with the roadmap within such period as may be approved by the Authority.

At the end of July, 2016, there are 55 insurance companies operating in India; of which 24 are in the life insurance business and 30 are in non-life insurance business.

In addition GIC is the sole national reinsurer. Of the 55 companies presently in operation, eight are in the public sector, of which two are specialised insurers, namely ECGC and AIC, one in the life insurance namely LIC, four in non-life insurance and one in reinsurance.

The remaining 47 companies, including standalone health insurance companies, 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," it said.

As can be observed from the above, 32 insurance companies in Life, General, including specialized insurers and the re-insurer companies have completed 10 years of operations, it said.

Of these only two life insurers have applied for getting their shares listed on the stock markets, it added.