Rejecting the demand from the life insurers to allow players those who have completed at least five years of operations to go public, the sector regulator, Irda has made an experience of 10 years as mandatory for life insurers? listing.

The Irda after a long wait has announced the draft IPO norms and has enlisted a series of stringent conditions in its regulations on ?Issue of Capital and Disclosure Requirements for Life Insurance Companies, 2011?. Earlier capital market regulator Sebi had given its nod to the Irda?s proposal to allow life insurers, a new class of companies to float IPOs.

Only after obtaining the consent of the Irda to make an application, the insurer may proceed with complying with various requirements as may be laid down by the Sebi under the ICDR Regulations, 2009, said Irda.

Some of the important conditions are :The insurance company should have maintained a satisfactory regulatory record with Irda; the insurer should have been fully compliant with the corporate governance guidelines; record of policyholder protection and pendency of complaints should be satisfactory; the company should have embedded value of at least twice the paid up equity capital; it should have maintained the prescribed regulatory solvency margin as at the end of the preceding six quarters.

Some other business details Irda wants the life insurers to furnish while applying for permission for IPO include gross premium along with geographic segmentation, cross selling, investment of above 5% of total funds in each sector through equity and bonds, reinsurance interest rate sensitivity, liability for future policy benefits and policy holders account balances, manner of arriving at unrealised gain/losses ? under IFRS or Indian equivalent, and solvency coverage ratio.

Irda has insisted that life insurers should abide by the corporate governance norms as laid down by it in addition to those contained in the listing agreement.

SB Mathur, secretary general, Life Insurance Council, said the Irda has accepted all the suggestions from the industry except two. ?We had asked if the life insurers will be permitted for private placement before going public but Irda hasn?t agreed on this. Secondly, we wanted Irda to allow life insurers, which need a great deal of capital, to go public after five years, but that has also been turned down by the regulator,?? said Mathur.

Amitabh Chaudhry, MD and CEO, HDFC Life, which has plans to access capital markets, said there are still some clarifications necessary for certain issues. First, how much time a life insurer will be given to go public after receiving approval from Irda. Secondly, how long will it take for Irda to approve the application for IPO. Also, the norm says that the embedded value should be twice the capital of a company. Moreover, it talks of profitability of a company over a remarkable period of time.

In case of Sebi, allows a company to go public, some part of IPO can be placed with QIP which should also be allowed for the life insurers. ?I think same should be applicable,? he said.

Non-life ipo norms in works

Irda is now preparing norms to allow the general insurance companies to go public. RK Nair, member, Irda, said, ?We are currently discussing with capital market regulator Sebi to finalise the disclosure norms for the general insurance companies. The general insurers need to have more broader disclosure norms than life companies.?