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Insurance companies may soon have to get themselves listed. Know why

PW Bureau

Sources said that the insurance regulator is set to engage with companies over the next few months to bring out necessary guidelines for the process

New Delhi: After a gap of three years, the Insurance Regulatory and Development Authority of India (IRDAI) is now again taking up the task of nudging insurance companies to get themselves listed on the stock exchanges. According to sources, the insurance regulator is set to engage with companies over the next few months to bring out necessary guidelines for the process, a report by Moneycontrol.com said.

The proposal had first been mooted in September 2015 but was withdrawn later after stiff opposition from insurance companies.

Listing of companies could bring capital to sector

“Listing of insurance companies with 10-12 years of business experience will be beneficial and also help to bring additional capital to the sector,” an official was quoted as saying. The process could start off with life insurers and then move to general insurers.

What is the criteria for companies to get listed?

According to IRDAI norms, an insurance company should be in business for about 10 years to be eligible for listing on the equity market. Parameters like financial performance, capital structure after offer and solvency margin, among others, are considered by the insurance regulator before it gives a nod to the companies.

According to sources, insurance companies with assets under management (AUMs) of above Rs 50,000 crore could also be nudged to go for an IPO.

The listed and the unlisted

Currently, HDFC Life Insurance, ICICI Prudential Life Insurance, ICICI Lombard General Insurance, SBI Life Insurance, New India Assurance and General Insurance Corporation of India are listed.

Aditya Birla Sun Life, Max Life, SBI General and IDBI Federal Life, on the other hand, are some of the other companies who will be eligible to go for a listing.

Gestation period in insurance sector is longer

While banks are required to get themselves listed within three years of starting operations, for insurance companies, the gestation period is longer. Insurance companies, on the other hand, take seven to eight years on an average to break even and achieve profitability.