Life insurers allowed to go public without profit record

Capital market regulator Securities and Exchange Board of India (Sebi) last week cleared the disclosure and accounting requirements for public offers by life insurance companies, but declined to relax the norms related to a mandatory profitability track record for insurers, as requested by insurance sector regulator Irda.

However, Sebi has informed the Insurance Regulatory and Development Authority (Irda) that life insurance companies can launch public offers, subject to certain conditions, even if they do not meet the requirement of having made profits in at least three years out of the past five years.

These conditions would require the insurers to launch their IPOs compulsorily through book building process, sell to the institutional investors at least 50 per cent of the shares being sold to the public and take necessary steps to ensure sufficient liquidity in stock after the offer, a senior Sebi official said.

As per Sebi regulations, the companies need to have a track record of profitability for at least three out of the immediately preceding five years.