IRDA has released a draft IPO guidelines for Life Insurance Companies.
When can Life Insurers apply for an IPO?
1. Only on completion of 10 years from the date of commencement of operations by the Insurer or such other period as may be prescribed by the Central Government.
2. The manner of divestment by the insurance company may be through any of the following options:
(i) Issue of capital under the ICDR Regulations;
(ii) Divestment of equity by one or more of the promoters through a public offer for sale under the ICDR Regulations; . and/or
(iii) Issue of capital/divestment of equity stake through other than (i) and (ii) above.
3. Prior to filing of the draft document for issue of share capital or for making an offer of sale to public with SEBI shall approach the Authority for its ‘formal approval’.
Eligibility Criteria for IPO
The insurance company has to file the proposal with IRDA with following minimum eligibility criteria –
1. The insurance company should have been in the life insurance business for a period of ten years from the date of commencement of such business or such other period as may be prescribed in the Insurance Act/by the Central Government);
2. The insurance company should have maintained a satisfactory regulatory record with IRDA;
3. The insurance company should have maintained the prescribed regulatory solvency margin as at the end of the preceding six quarters;
4. The insurance company should have been fully compliant with the disclosures requirements as mandated in the IRDA Circular No. IRDA/F&I/CIR/F&A/012/01/2010 dated 28th January, 2010;
5. The insurance company should have been fully compliant with the Corporate governance Guidelines issued by IRDA;
6. The insurance company’s record of Policyholder Protection and the pendency of the policyholder complaints should be satisfactory; and
7. The insurance company should have embedded value of at least twice the paid up equity capital.
IRDA has asked for suggestions or comments on draft IPO guidelines for Life Insurance Companies by June 30, 2011.
Draft proposal attached herewith for your reference (IRDA_IPO_Draft_Regulations-Exposure_Draft).