Irdai seeks IPO road map from 10 general and life insurance companies

The Insurance Regulatory and Development Authority of India (Irdai) has asked at least 10 general and life insurance companies to submit a detailed road map for their listing strategies by the end of this month, according to multiple sources with direct knowledge of the matter.

 

“The regulator met four life and six general insurers last month and asked them to provide their listing strategies by the end of February,” said one of the sources.

 

Major companies that attended the meeting include HDFC ERGO General Insurance, IFFCO Tokio General Insurance, TATA AIG General Insurance, Bajaj Allianz General Insurance, IndiaFirst Life Insurance, and Aditya Birla Sun Life Insurance.

 

Email queries sent to the regulator and the aforementioned companies remained unanswered at the time of going to press.

 

“Some companies have already submitted their position, while others are planning to do so soon. We have also shared several suggestions with the regulator regarding the Indian insurance market and highlighted our anticipation for the pending insurance Bill, which would provide greater clarity for the sector,” noted another source.

 

M Nagaraju, secretary of the Department of Financial Services, said in a Budget interview with Business Standard that the insurance amendment Bill is likely to be introduced in the ongoing session of Parliament. The Bill proposes increasing the foreign direct investment (FDI) limit in insurance companies from the current 74 per cent to 100 per cent. It also aims to allow composite licensing for insurance companies.

 

Nagaraju added that the Bill would permit foreign insurance companies to bring key managerial personnel (KMP) into India and repatriate profits without restrictions.

 

A third source explained that Irdai aims to enhance transparency and professionalism in the insurance industry through the listing strategy. “The regulator has primarily called on insurance companies that have been in the Indian market for over 20 years and meet the listing criteria. But some of us are still not ready for the listing process despite meeting all requirements,” the source added.

 

To list on an Indian stock exchange, an insurance company must meet several performance parameters. Either the company or its promoters must have at least three years of experience in the insurance sector and a positive net worth. The company must have achieved an operating profit of at least ₹1 crore for two of the last three financial years and maintained a positive free cash flow to equity (FCFE) during the same period.

 

Last year, Irdai proposed removing the requirement for Indian insurance companies to seek prior regulatory approval before listing on stock exchanges, subject to compliance with specified conditions.

 

For the financial year ended March 31, 2024, HDFC ERGO, TATA AIG, IndiaFirst Life Insurance, and IFFCO Tokio General Insurance reported net profits after tax of ₹437.7 crore, ₹684.9 crore, ₹112.3 crore, and ₹255.1 crore, respectively.