It is likely that the IPOs of New India Assurance and General Insurance Corporation of India (GIC Re) will be out in this financial year.
The initial public offerings (IPOs) of National Insurance, United India Insurance and Oriental Insurance may be pushed to the second half of the next financial year. While the government had given a go-ahead for the listing of state-owned general insurers, solvency dropping below 150 percent for two insurers has led to the delay. Sources said that the government is also looking to time them better and have an appropriate gap between the issues.
Among them, National Insurance which earlier had the minimum solvency drop below 150 percent pulled it back to 190 percent by the fourth quarter of last fiscal. As per regulatory norms, all insurers are required to maintain solvency capital of 150 percent at all times.
“Since these are large issues, adhering to the regulatory norms on capital will be crucial. They have been given time of three years before which they will have to bring it up. This is also to ensure that they get a proper valuation,” a source close to the development said.
The public disclosures of Oriental Insurance showed that their solvency is still below 150 percent and stood at 111 percent in FY17. In the first quarter of this fiscal, their solvency was at 118 percent.
United India had a solvency of 115 percent for FY17. National Insurance solvency stood at 169 percent for Q1 of FY18.
“While it is not a necessity to have 150 percent solvency to list on the exchanges, the government has decided to give them more time to shore up capital. Once they are closer to the regulatory limit, listing will be looked at,” a senior official said.
Recently, Insurance Regulatory and Development Authority of India (IRDAI) Chairman TS Vijayan said that while solvency has dropped to below 150 percent for some insurers, he added they have given some time to PSU insurers to shore up capital to 150 percent.
It is likely that the IPOs of New India Assurance and General Insurance Corporation of India (GIC Re) will be out in this financial year. They have already filed their draft papers with Securities and Exchange Board of India (Sebi) for their proposed IPO.Apart from these factors, sources said that the government is looking at one IPO a quarter so that investor appetite for these issues does not reduce.