The Insurance Regulatory and Development Authority’s (IrDA) today said that guidelines to allow life insurance companies to raise funds from the capital market will be out by the end of this month. However, according to experts, the likelihood of insurers wanting to launch an initial public offering (IPO) is low for at least next one or two years as players are mulling to wait until their valuations improve.
“They (life insurers) will be completing 10 years (in business) later this year. Our IPO guidelines must be in place before that… by end of this month,” Irda chairman J Harinarayan said. The talks of allowing insurance companies to list have been going on for about three years now. Private insurers like Reliance Life and HDFC Standard Life, in the past, had expressed willingness to go public.
Said R Krishnamurthy, MD (Products, Distribution and Markets), Towers Watson, India, “The focus for the life insurance industry would not be IPO but building value through launching initiatives towards improving distribution and cost management for next two years. Currently, the valuations are impaired because of the new regulations and combined with expected market volatility in the short-term, the life insurance companies would avoid going public.”
SB Mathur, secretary general, Life Insurance Council — body that represents life insurance companies in India, said, “life insurance industry is still adjusting with the new regulatory environment. Several changes have been introduced in short period and companies are re-working their strategies. This will take some time.”
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