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IPO guidelines for life insurance companies are finally out

The IRDA has released the guidelines for the Issuance of Capital by Life Insurance Companies, allowing insurers who have completed 10 years from the date of commencement of business to raise share capital through a public issue. #separator_sa

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Last Updated - May 23, 2023
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Issuance of Capital by Life Insurance Companies – IRDA Regulations, 2011

The IRDA has released the guidelines for the Issuance of Capital by Life Insurance Companies, allowing insurers who have completed 10 years from the date of commencement of business to raise share capital through a public issue.

Registration date of Life Insurance Companies in India

Highlights of Issuance of Capital Regulations, 2011 are:

.Life insurance companies that have completed 10 years can propose to raise share capital through an IPO

.They need to take approval from IRDA

.Approvals granted by IRDA will be valid for 1 year from the date of issue of the approval letter

.Within the one-year period, the life insurance company must file the Draft Red Herring Prospectus (DRHP) with SEBI under the ICDR Regulations

.IRDA reserves the right not to accord its approval

If the IRDA holds the right to not grant its approval if it feels that the applicant’s life insurance company is not compliant with the regulatory framework, or it may not be in the interest of the insurance business; or if it may be damaging to the interests of the policyholder.

The insurance regulator will consider the company’s overall financial position, its capital structure post offer of capital or issue, its regulatory record, and the purpose for raising capital through IPO.

Parameters for consideration of approval by IRDA are:

.The history of compliance by the life insurer with the regulatory framework

.Maintenance of the prescribed regulatory solvency margin as at the end of the preceding six quarters starting from the quarter immediately prior to the date of filing the application

.Compliance with Corporate Governance Guidelines and disclosure requirements mandated under IRDA circular dated 28th January 2010

.The Embedded Value of the applicant life insurance company

Although the regulator has not given a specific timeline for processing and granting its approval, it will expedite its process and ensures that the applicant’s life insurer will get a prompt response to all queries and requests.

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Jay Vasa is a content writer, who has got his core emphasis on insurance related information. The sole motive of writing articles is to spread appropriate information to the people regarding one of the important and discussed topic in today's time.