IPO guidelines for Life Insurance Companies released by IRDA.
Life insurance companies that have completed 10 years in existence with strong financials to back them up, will now be able to raise money through Initial Public Offering IPO.
According to draft guidelines released by IRDA, life insurance companies that meet the criteria would be able to list their shares.
Eligibility criteria laid down by IRDA state that the life insurance company:
1. Should be in the life insurance business for a period of 10 years from the date of commencement of such business
2. Should have maintained a satisfactory regulatory record with IRDA
3. Should have maintained the prescribed regulatory solvency margin at the end of the preceding six quarters
4. Should have a record of policyholder protection and the pendency of the policyholder complaints should be satisfactory
5. Should have been fully compliant with the disclosures requirements as mandated in the IRDA Circular
6. Should have been fully compliant with the Corporate Governance Guidelines issued by IRDA
7. Should have embedded value of at least twice the paid-up equity capital
HDFC Standard Life and ICICI Prudential Life are among the life insurance companies that have completed 10 years in existence. ICICI Prudential Life Insurance Company’s Managing Director, Sandeep Bakshi had earlier released a statement that the company is well capitalized and hence not keen on going in for an IPO.
The proposed IRDA Regulations 2011 reads that no issuance and allotment of capital by an insurance company shall be, in any form other than as fully paid-up equity shares. The authority will consider the life insurer’s overall financial position, regulatory record, and the proposal for the issue of capital prior to giving its formal approval to the proposal to get its shares listed on the stock markets.
Interested life insurance companies will have to first obtain IRDA’s consent to make an application. Post this, they may proceed to fulfill any requirements as may be laid by the Securities Exchange Board of India (SEBI) under the ICDR Regulations 2009.
IRDA has also asked the life insurance companies to get back with any suggestions or comments by June 30, 2011.
