The insurance regulator is gearing up for listing of the four PSU insurance companies and is in talks with Finance Ministry for the same. That’s the world coming in from the chairman of IRDA, TS Vijayan in a rare interview, he spoke to CNBC-TV18's Kritika Saxena on concerns raised by insurance players on mandatory listing, IPO pipeline from insurance space, foreign inflows into the country and the regulatory changes that IRDA was gearing for.
Below is the verbatim transcript of TS Vijayan’s interview to Kritika Saxena on CNBC-TV18.
Q: What are the concerns raised by the insurance players on mandatory listing?
A: There is a bit discussion on this IPO. Let see how this goes because other people are also keenly watching how the IPO of ICICI Prudential is going to work. We had taken out a paper, discussion paper on listing because even old act there was a provision that after 10 years the insurance companies should be listing. So, we have taken a paper, we have got a number of feedback from different companies.
Q: What is the feedback that you have got from companies so far because lot of companies we have been talking insurance players, in fact day before yesterday Anil Ambani in Reliance Capital AGM indicated that mandatory listing aspect is something that independent players may not be in favour of?
A: True, many of these players mandatory listing is not okay. Probably, they will be more happy with having their own timing for listing. However, I was told that some companies are getting ready for this thing also.
Q: For instance could you take us through which companies are right now ready to tap the capital market?
A: For example, there is a talk of listing of public sector units (PSUs) general insurance companies - four of them. What is the timetable I don’t know, but it is constantly, it is being talked about that they will be coming out with listing. When we meet Finance Ministry people and all the insurance people, when they come here they do discuss the possibility of listing. However, no concrete paper has come so far.
Q: If you look at the IPO market as a whole there is a lot of talk that insurance is still not as well penetrated? Do you believe that the valuation of individual insurance companies has now reached its peak?
A: As far as insurance penetration is concerned insurance sector is growing very well. After 2000, 2000 is the year, private companies have also started playing in this market and 15 years the premium has become 10 times – 15 years. So, we do expect the same momentum to continue for next four-five years.
Q: As far as foreign players expanding their stake in Indian insurance partners is concerned most have already increased it to 49 percent. Are you seeing more foreign inflows in to the insurance sector in the next say one or two years?
A: Even this year just after passing, more than Rs 17,500 crore has come from foreign moneys. It is a substantial amount coming out then and when we are going to give licence to reinsurance branches just to open which will happen this year or next year, we have some branches to open. More companies will come in and start their business here. Naturally, they will have to put huge money here. I believe even double of this money will be required in the next few years to increase the penetration to may be 5-6 percent level.
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