There could be a flood of insurance IPOs hitting the capital market soon with the Insurance Regulatory and Development Authority of India (IRDA) proposing that all general insurance companies, including standalone health insurers, that have been in existence for 8 years and life insurance companies in operation for 10 years should initiate steps to get their shares listed.
A majority of existing insurance companies, both the life and general insurance space, including the Life Insurance Corporation of India (LIC) have been in existence for the period stipulated in a Discussion Paper on Listing of Indian Insurance Companies issued by IRDA on Friday.
The insurance regulator has said that all companies meeting the stipulation on minimum years of existence for listing should initiate steps to get listed within a period of three years from the date of issue of directions under these guidelines.
Suggesting a road-map for listing after issuance of the guidelines, IRDA has said that all Indian insurance companies which meet the criteria on number of years shall:
- Take up the listing proposal to their Board of Directors within three months from the date issue of these guidelines
- File the road-map for IPO duly approved by the Board of Directors with the Authority within 45 days from the date of approval by the Board
- Initiate action for IPO in accordance with the road-map within such period as may be approved by the Authority.
The disclosures should include issues such as embedded value, segment wise lapsation of policies and contribution to profitability, among others. The insurance regulator has advised all insurers, through its Guidelines on Corporate Governance that “all Indian Insurance Companies to familiarise themselves with Corporate Governance structures and requirements appropriate to listed entities.”
IRDAI has said that insurance companies, even if they are unlisted, should initiate necessary steps to address the “gaps” identified to facilitate smooth transition at the time of their eventual listing in course of time. In providing interim directions on disclosures and governance, the IRDA has said that all insurance companies shall initiate steps to ensure that the level of disclosure in public domain is brought up to the level of listed entities as stipulated by insurance regulator and the Securities and Exchange Board of India (SEBI).
As of now, there are are 19 general insurance companies (including standalone health insurance companies and reinsurers) that have completed 8 years or more existence, while there are 16 life insurance companies that have been in existence for over 10 years. However, only 2 life insurance companies have filed for their shares to be listed.