The Economic Survey 2010-11 has proposed a different set of disclosure requirements for life and nonlife insurance firms for initial public offers (IPO) because of the distinct nature of the two businesses.
The Insurance Regulatory & Development Authority (Irda) and Securities & Exchange Board of India (Sebi) are working together on finalising IPO norms and disclosure requirements for insurance companies. “While laying own the stipulations on disclosure requirements, Irda has drawn on international best practices,” said the survey.
According to the survey, the investor should be aware of financial performance, company profile, financial position, risk exposure, elements of corporate governance in place and management of the insurance companies.
“While life insurance is a long-term contract, non-life or general insurance are usually of one-year contracts. In respect to life insurance companies, assumption of current and future business form basis of profitability, hence factors such as persistency ratio are very critical,” said SB Mathur, secretary general, Life Insurance Council.
Under existing regulations, insurance companies can come out of with IPO after completion of 10 years in business. Insurance firms like HDFC Standard Life, ICICI Prudential and SBI Life have completed this tenure. Companies like Reliance Life and HDFC Standard Life Insurance have expressed interest in tapping the capital market.
It has also emphasised the need for the Pension Fund Regulatory and Development Authority (PFRDA) Bill to be passed to give a fillip to regulatory robustness in the pension sector. PFRDA is yet to get statutory powers.
The Insurance Regulatory & Development Authority (Irda) and Securities & Exchange Board of India (Sebi) are working together on finalising IPO norms and disclosure requirements for insurance companies. “While laying own the stipulations on disclosure requirements, Irda has drawn on international best practices,” said the survey.
According to the survey, the investor should be aware of financial performance, company profile, financial position, risk exposure, elements of corporate governance in place and management of the insurance companies.
“While life insurance is a long-term contract, non-life or general insurance are usually of one-year contracts. In respect to life insurance companies, assumption of current and future business form basis of profitability, hence factors such as persistency ratio are very critical,” said SB Mathur, secretary general, Life Insurance Council.
Under existing regulations, insurance companies can come out of with IPO after completion of 10 years in business. Insurance firms like HDFC Standard Life, ICICI Prudential and SBI Life have completed this tenure. Companies like Reliance Life and HDFC Standard Life Insurance have expressed interest in tapping the capital market.
It has also emphasised the need for the Pension Fund Regulatory and Development Authority (PFRDA) Bill to be passed to give a fillip to regulatory robustness in the pension sector. PFRDA is yet to get statutory powers.
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