The Insurance Regulatory and Development Authority of India (IRDA) made it compulsory for large life insurance companies to be listed within a specific period. So far these companies have shown no interest in going to public even if they have completed 10 years of operations According to sources associated with the developments those private-sector life insurance companies whose assets under management (AUMs) are more than Rs 60,000 crore will be the first ones that needs to be listed. As per the data on March 31, 2015, SBI Life Insurance with a total AUMof Rs 71,339 crore, ICICI Prudential life Insurance with AUM of Rs 1,00,183 crore and with HDFC life an AUM of Rs 67,000 crore are the three main life insurers of India among which only HDFC Life has shown interest to be listed.
The norm of IRDAI specifies that a company which has been in the insurance business for more than 10 years is eligible to be listed on the equity market. The regulator considers the factors such as the financial performance and capital structure after offer and solvency margin of the company to give its approval to be listed. In its exposure draft on ‘Issuance of Capital by Indian Insurance Companies transacting Life Insurance Business’, IRDAI proposed that for the life insurers with huge operations it should be listed so that the risks and returns can be shared among the shareholders.
Insurance officials said this step was taken by the regulator to increase transparency and accountability. Although it was expected that each life insurer would go for an Initial Public Offering after completing 10 years ,only one-two companies have shown the intent. The main reason or this decline in number was due to stress in business, low foreign direct investment cap and poor market conditions.
IRDAI chairman T S Vijayan has the view that the listing of insurers would bring about greater transparency and it would bring in the scrutiny required for efficient management of companies will in turn will improve the corporate-governance structure.
