Irda clears IPO guidelines for insurance firms

Says draft likely to be out for public comments before the final regulation

“We are expecting the guidelines shortly. We have given our observations. The matter is currently with the Securities and Exchange Board of India (Sebi),”  Irda Chairman J Harinarayan told PTI.

He further said the valuation norms for the companies have been finalised in consultation with the Institute of Actuaries. “Idra, in consultation with the Institute of Actuaries, has given its views on the IPO. Sebi has to clear it now,” he added.

Irda, which has been working on the initial public offer guidelines along with the market regulator Sebi, is likely to come out with a draft for public comments before issuing the final norms. Several private sector insurers, including Reliance Life, have shown interest in tapping the capital market to augment their resource base.

The Centre had proposed to ease the norms to allow insurers to list after five years of operation, instead of the current 10-year practice. As per the Insurance Act, promoters having 26 per cent stake can offload equity after 10 years of operation. The legislation also empowers the government to reduce the mandatory period.

Disclosure norms

Irda had already notified the disclosure norms, necessary for providing details about the operations and balancesheets on quarterly and yearly bases. The IPO guidelines will deal
with minimum norms that a company must fulfil before hitting the capital markets.

Norms for correct valuation, disclosure of operating results and profit and loss account and filing of the draft red herring prospectus are the three essentials that a company have to fulfil when going for public float.

Besides the state-owned Life Insurance Corporation, 22 private companies are offering life insurance policies. The general insurance sector has 21 players which include four state-owned companies.