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Irdai to make listing a must for large insurers

  • The Insurance Regulatory and Development Authority of India (Irdai) will make it mandatory for large life insurance companies to list within a specific period.
  • The three largest insurance companies at present are SBI Life Insurance, ICICI Prudential Life Insurance and HDFC Life, only HDFC Life has so far shown any inclination to list.
  • According to Irdai norms, a company has to be in the insurance business for 10 years to be eligible to list on the equity market.
  • The regulator considers the financial performance, capital structure after offer and solvency margin, among other factors, to give its approval.
  • “The authority might direct an Indian insurance company transacting in the life insurance business to go for a public issue if the circumstance so warrants,” Irdai said in the exposure draft.
  • Being a state-owned entity, LIC’s initial public offering (IPO) decisions will be taken by the government.
  • “It was implicit that each life insurer would bring out an IPO after completing 10 years. However, even after 10-12 years, only one-two companies have shown intent. The regulator wants to nudge large players to list, so that others follow suit,” said the chief executive of a private life insurer.
  • Irdai chairman T S Vijayan had recently said that listing of insurers would bring about greater transparency and accountability.
  • He also added listing of insurers would bring in the scrutiny required for efficient management of companies.

Source: BS

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