Non-life insurers are unlikely to hit the capital market to raise resources and are expected to wait for a year or two because of weak financials, a top official of an insurance company said.
“None of the insurance companies are in a position to list their shares. Insurers are not making a profit. Their finances are fragile,” General Insurance Corporation of India Chairman & Managing Director Ashok K Roy told an interactive session of the Indian Chamber of Commerce here.
“They are short in solvency and losing money on underwriting. I think insurers will wait for some more time, may be one or two more years till finances improve,” Roy said.
The non-life insurance companies are not in favour of embedded value concept for valuation mentioned in the draft regulation by IRDA on IPO. Non-life insurers underwriting losses stand at Rs 8,817 crore in 2011-12 down from Rs 9,944 crore registered last year.
Back in September last year, the Insurance Regulatory and Development Authority (IRDA) had issued draft guidelines on initial public offers for general insurance companies. Most of the non-life companies have already taken steps to improve their financials by revising the tariff in health schemes.
The draft norms non-life insurers from capital markets need to have at least 10 years experience. The insurers will also have to seek prior approval from IRDA for the public issue of shares.