As per the draft guidelines by IRDA, companies who have completed 10 years of operations in insurance business are now eligible to go for initial public offer (IPO).
Further for approval, the company should have maintained a satisfactory regulatory record and have maintained the prescribed regulatory solvency margin at the end of the preceding six quarters. The requirement to embedded value of at least twice the paid-up equity capital is an additional condition for the companies applying for the approval.
Commenting on the announcement, IRDA said, “The authority reserves the right not to accord its prior approval if, in its opinion, the applicant company is not fit to tap the markets through a public issue or where it may be detrimental to the interests of policyholders, or it may not be in the interest of the insurance business in the country."
A draft guidelines - Issues of Capital and Disclosure Requirements (ICDR) Regulations, 2011 for Life Insurance companies has been issued by IRDA; which explains the norms of initial public offerings or dilution of promoters" stake for life insurers.
After taking a formal approval from IRDA, the insurance company should file a draft document for issue of share capital with the Securities and Exchange Board of India (SEBI).
An insurance company need to meet all the disclosure norms laid down by SEBI in ICDR regulations.
In addition to that, the insurance company should also disclose risk factors that are related to the insurance companies like credit, liquidity, operational risks, etc.
View: After all the squabble in 2009 over who should have the final word between IRDA and SEBI, it turns out SEBI might have the last laugh. Since, even on approval by the insurance regulator, it will be the market regulator who will have the final word on listing.