Moneycontrol
May 19, 2017 06:12 PM IST | Source: Moneycontrol.com

This year, slew of insurance IPOs await investors

As per regulatory norms, an insurer will have to post profits for three consecutive years and be in operation for atleast 10 years for it to get permission to list.

ByM Saraswathy
This year, slew of insurance IPOs await investors

The insurance sector, which otherwise has been a quiet participant in the initial public offering (IPO) of companies, will have about three new listed entities by the end of this financial year.

ICICI Prudential Life Insurance was the first listed insurance company in the country, being listed in 2016.

While the initial plan was to have insurance companies list on the stock exchanges once they complete ten years in business, not all insurance companies were in favour of this. Hence, this was not made mandatory for insurers unlike in the banking sector where listing is compulsory across different categories of banks.

As per regulatory norms, an insurer will have to post profits for three consecutive years and be in operation for atleast 10 years for it to get permission to list.

State-owned general insurer New India Assurance and reinsurance firm General Insurance Corporation of India (GIC Re) will be the first set of non-life insurers to bring out their IPO in this financial year. The initial process of the IPO has already begun among the insurers who expect the process to be completed in the next 6-8 months.

Among the life insurance companies, SBI Life Insurance is expected to complete its process by the end of this financial year. While he did not give a timeline, Arijit Basu, MD and CEO, SBI Life Insurance told Moneycontrol that State Bank of India (SBI) will divest upto 6-8 percent depending on the market conditions and they wanted to have that flexibility.

“Our foreign partner has decided to divest 4 percent. Currently, we are in the initial process of listing,” he added.

The criteria for listing in the banking sector is Rs 500 crore net-worth and the entity is required to list within six years of beginning operations. Even smaller entities like small finance banks are required to meet this objective.

The other insurance companies in line for an IPO include National Insurance and Oriental Insurance. However, their listing is expected only in the next financial year. The insurers are currently involved in shoring up their solvency margin as well as reducing their underwriting losses.

Among other insurance companies, SBI General also has plans to list. Pushan Mahapatra, MD and CEO, SBI General in a recent interaction with Moneycontrol said that while they plan to be a listed entity in the medium term, they will first focus on wiping out their underwriting losses and pay dividends to promoters for a couple of years.

Depending on when the final approvals come in, HDFC Life will also be a listed entity on the stock exchanges once Max Life Insurance is merged with it. Since Max Financial Services, the holding company of Max Life is listed, HDFC Life Insurance will automatically be listed post the merger.
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