India Life Insurance – Insurers get profitability clause waiver for IPOs:: RBS

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Instead of imposing a three-year profitability record condition in the proposed IPO guidelines, the
IRDA had recommended that the embedded value be twice the paid-up capital.
According to a Business Standard news report, SEBI has approved the same, which is a positive
for industry. Refer to http://www.business-standard.com/india/news/insurers-get-profitabilityclause-
waiver-for-ipos/452934/
The foreign direct investment cap (26% currently) continues to remain the key impediment for
IPOs.
Conditions set by IRDA in draft IPO guidelines for insurance companies:
􀀟 The company should have been in the life insurance business for 10 years from the date of
commencement of such business or such other period as may be prescribed in the Insurance
Act/by the Central Government.
􀀟 The company should have an embedded value of at least twice the paid-up equity capital.
􀀟 The company should have maintained a satisfactory regulatory record with IRDA.
􀀟 The company should have maintained the prescribed regulatory solvency margin as at the
end of the preceding six quarters.
􀀟 The company should have been fully compliant with the disclosure requirements as mandated
in the IRDA Circular dated 28 January 2010.


􀀟 The company should have been fully compliant with the Corporate Governance Guidelines
issued by IRDA.
􀀟 The company’s record of policyholder protection and the pendency of policyholder complaints
should be satisfactory