Indian general insurers yet to meet regulatory requirements for IPO
Indian general insurers are not yet ready to be listed on stock exchanges as they are yet to make profits, reports the Hindu Business Line citing Ashok K. Roy, chairman and managing director of General Insurance Corp. of India Ltd.
Mr. Roy voiced his views at the Indian Chamber of Commerceâ€™s session on insurance. Mr. Roy said that insurers are currently suffering from low solvency and underwriting losses, adding that insurers might be able to launch public issues over the next year or two when the markets improve.
In September 2012, the Insurance Regulatory and Development Authority launched a draft regulation that allowed general insurers, who have been in the business for 10 years or longer, to launch a public issue.
An insurer must seek the IRDAâ€™s approval before approaching the Securities and Exchange Board of India for public issue. The IRDA will base its approval on the insurerâ€™s overall financial position; its regulatory record; the proposal for capital issue and the purpose for which the capital is being raised.
The regulator will also consider parameters such as embedded value, maintenance of regulatory solvency margin and compliance with the corporate governance guidelines, among others. Industry insiders said that it was difficult for insurers to abide by these norms.
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