IRDA recently announced that the IPO (Initial Public Offer) guidelines will be released within the next 45 days. Following which, insurance companies that have completed 10 years in business will be able to raise equity from the markets.
ICICI Prudential Life however may not be too keen on raising more money from the markets yet. The Company’s Managing Director and Chief Executive, Sandeep Bakshi, said, “We are not very keen on going in for an IPO as we don’t need to raise any capital now. We are, in fact, very well capitalized.”
At the 13th Global Conference of Actuaries (GCA), organized by the Institute of Actuaries of India, the main highlight for discussion was “Indian insurance companies going public.” R Kannan, Member (Actuary), IRDA said that the IPO guidelines will be issued in the next 30-45 days. He also said that the IRDA will release the Mergers and Acquisitions (M&A) norms within the next 3 months.
As per IRDA mandate, insurance companies have to meet minimum solvency requirement of 150%, which means their assets always need to be in excess of liabilities by 1.5 times. For this the companies need to keep recapitalizing their ventures in tandem with the policies they underwrite.
Sunil Sharma, Actuarial Head, ICICI Prudential said that their solvency level is over 300% against the regulatory requirement of 150%, hence the company does not need capital by way of divesting their stakes.
Out of the 22 private life insurance companies in India, the companies that qualify the 10 year in existence clause for the IPO are HDFC Standard Life, SBI Life, Bajaj Allianz Life and ICICI Prudential Life.
