Not to list life insurance arm for next few qtrs: Rel Cap

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Not to list life insurance arm for next few qtrs: Rel Cap

Sam Ghosh, CEO at Reliance Capital said the listing of the company’s life insurance arm, Reliance Life Insurance, was not likely to happen for the next few quarters due to the new regulatory environment. The Finance ministry has to approve of listing the life insurance business before completion of 10 years, he said.

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Excerpts from Your Stocks on CNBC-TV18 Watch the full show » ALSO READ See latest News about Rel Capital See previous management interviews See what other Experts & Brokerages are saying about Rel Capital Rel Capital BSE | NSE 29/05/12 Are Mutual Funds betting on Rel Capital?

Sam Ghosh, CEO at Reliance Capital said the listing of the company's life insurance arm was not likely to happen for the next few quarters due to the new regulatory environment. The Finance ministry has to approve of listing the life insurance business before completion of 10 years, he said.

Reliance Life Insurance's current product mix ratio of ULIP and non-ULIP portfolio is 50:50, he stated.

Ghosh added that Reliance Capital was currently in talks with the Insurance Regulatory and Development Authority (IRDA) to divest its general insurance business. He however, declined to comment on of Reliance General's merger is with Royal Sundaram.

He sees an 11% growth in the AUM of the company's asset management business.

Here is the verbatim transcript of Sam Ghosh interview on CNBC-TV18. Also watch the accompanying video.

Q: What's the status of the insurance arm listing plans?

Ghosh: Whenever the opportunity first comes to look at listing we will look at it. SEBI had recently released the disclosure requirements for IPO for insurance companies. Now IRDA has to come out with the guidelines and once the guidelines come out we will look at listing. Also the compounding factor is with the changes in regulatory regime in ULIPs as well as in universal life. It will take two-three quarters first to stabilize and show consistent returns on our new business margins as well new business achieve profits for the customers to come back and be confident that investors as well as retail customers want to come in for IPO should be comfortable that this business is performing and performing to the level we think is right. It's three-four quarters away before we can think of doing an IPO.

Q: What about the divestment plans for Reliance Life?

Ghosh: We are in talks with few potential investors but we again what to wait for a couple of quarters before we can come to a final conclusion because ultimately valuations are dependent on how your new business margins are performing and that we can start demonstrating clearly from December quarter as well as March quarter. That will give us two-three quarters before coming to some conclusion with the potential people we are talking to.

Q: The other thing was the Reliance General merger with Royal Sundaram-could you throw some light on that because currently there are not M&A guidelines as far as the insurance industry is concerned?

Ghosh: Firstly, I have got no comment on whether it's Royal Sundaram. Certainly we have been looking at divestment and we would look at that in due course. We are talking to regulators and once they come out with the guidelines we will look at that.

Q: You have shown an interest in banking license can you take us through that?

Ghosh: On the banking side as our Chairman has mentioned, for the last two AGMs of our company that we would certainly look at banking license if the opportunity comes. We have to wait the final guidelines, the draft guidelines are expected to be out in January.

Hopefully, six-seven months after that opportunity comes for final guidelines then only we will know whether companies like ours can apply for baking license, will they be converted to a bank, what are the opportunities and then we will decide on that basis whether we want to go forward on that.