Life insurance majors like SBI Life Insurance, HDFC Standard Life, Reliance Life and ICICI Prudential may be able to launch initial public offers in the current fiscal itself as the insurance regulator Irda and capital market regulator Sebi, fresh out of a turf war, have resumed the process for listing these companies. The necessary guidelines are under preparation.
The insurance regulator has already restarted consultations with Sebi to prepare the final draft on the valuation method to be adopted in the case of insurance companies, sources said.
?In simple terms, the embedded value of a life insurer is the sum of the adjusted net worth and the value of in-force business allowing for the cost of solvency margin held. In consultation with Irda, we will soon come out with a method for calculating this,? said a Sebi official involved in the process.
Disclosure requirements for insurance companies intending to list are in the final form and are likely to be released by the end of the month.
Sebi will also have to take a call on the requirements to be fulfilled by the companies while filing the red herring prospectus.
Towards the end of last fiscal itself, Irda had conducted consultations with insurance companies and the Institute of Actuaries regarding the valuation method to be followed. ?We were expected to discuss this in detail with Sebi in January itself and meetings were scheduled, which did not take place due to certain unforeseen reasons,? said an Irda official.
The turf war over regulating annuity products and Ulip schemes started last December, with Sebi pulling up HDFC Standard life for not seeking its permission before launching an annuity product.
There are 23 life insurance companies in India, of which only three have managed to break even. Last year, the government had mooted a proposal to allow insurance companies to tap the markets after operating for five years. The extant guidelines stipulate that an insurance company be operational for at least 10 years before listing.
No private life insurer in India has completed 10 years of operation and a reduction to five years will allow more than 10 companies to tap the market. HDFC Standard Life, country?s first private life insurer started operation in October 2010.
The market-consistent embedded valuation method that needs to be vetted by Sebi and Irda jointly values the assets and liabilities of an insurance company after taking into account lapsation rate of policies and mortality changes among others.