Capital Market Regulator SEBI approved Share Sale Guidelines for Insurance Firms

Economy Current Affairs 2011. Capital market regulator SEBI approved share sale guidelines for insurance firms

Capital market regulator SEBI approved share sale guidelines for insurance firms. The norms once cleared by the government will ensure the entry of the insurance industry to revive the dormant primary market as the novelty value of the sector could attract more investors.

IRDA had earlier specified that insurers that have completed 10 years of operations are eligible to go for share sale. Prior to filing of the draft document for making public offer with SEBI, the insurer is required to take a formal approval from IRDA.

SEBI withdrew a major irritant for life insurance companies waiting to hit the capital market with initial public offers. While clearing IPO guidelines of life insurance companies, the regulator removed the three-year profitability clause that is applicable for all companies as a precondition for tapping the capital markets.

However, insurance companies will have to go for additional disclosures as required by the Insurance Regulatory Development Authority (IRDA) over and above the disclosure norms set by SEBI. The move to remove the three-year profitability clause is expected to bring some relief to the majority of life insurance companies, as most of them are yet to underwrite any profits.

According to the draft guidelines, insurance companies, which have completed 10 years of operations, will be allowed to tap the capital market and the valuation would have to be based on the embedded value to be calculated by a method designed by the Institute of Actuaries of India.

Insurers planning IPOs will have to disclose their economic capital as well as the embedded value to the regulator.
They have to first seek formal approval from IRDA and then the final approval from SEBI. Typically, under the disclosure norms, insurance companies will have to disclose their balance sheet, premiums, commission expenses and operating expenses on a quarterly basis.

Apart from this the guidelines are expected to follow the usual norms, like individuals holding more than 10 per cent stake would be considered as promoters and the company will have to maintain a solvency ratio of 1.5.
IRDA will not have any mandate on the extent of dilution, and it is up to individual companies to decide on the size of the issue. SEBI guidelines mandate 25 per cent of the shares of a listed company be retained by the public.

The IPO guidelines are considered important as a host of private life insurance companies, such as Reliance Life, HDFC Life and ICICI Prudential Life have expressed interest in tapping the capital market.

Take Weekly Tests on app for exam prep and compete with others. Download Current Affairs and GK app

एग्जाम की तैयारी के लिए ऐप पर वीकली टेस्ट लें और दूसरों के साथ प्रतिस्पर्धा करें। डाउनलोड करें करेंट अफेयर्स ऐप

Read the latest Current Affairs updates and download the Monthly Current Affairs PDF for UPSC, SSC, Banking and all Govt & State level Competitive exams here.
Jagran Play
खेलें हर किस्म के रोमांच से भरपूर गेम्स सिर्फ़ जागरण प्ले पर
Jagran PlayJagran PlayJagran PlayJagran Play

Monthly Current Affairs PDF

  • Current Affairs PDF May 2023
  • Current Affairs PDF April 2023
  • Current Affairs PDF March 2023
  • Current Affairs PDF February 2023
  • Current Affairs PDF January 2023
  • Current Affairs PDF December 2022
View all

Monthly Current Affairs Quiz PDF

  • Current Affairs Quiz PDF May 2023
  • Current Affairs Quiz PDF April 2023
  • Current Affairs Quiz PDF March 2023
  • Current Affairs Quiz PDF February 2023
  • Current Affairs Quiz PDF January 2023
  • Current Affairs Quiz PDF December 2022
View all