Insurance IPOs hit in near time

Dalal Street ExclusiveAwaiting response from the Parliament to go public, life insurance companies are seemingly looking to put their plans of listing on the stock exchanges on the backburner. Notably, Parliament’s nod for the Insurance Bill is also expected to enhance the foreign investment limit. Insurers feel that going for an IPO would require examining actual situation after the Parliament clears the Bill as ground realities may change.

However, a debate is going on between the government and the Insurance Regulatory and Development Authority (Irda) over the issue of mandate of listing of insurers after 10 years.

On one hand, Irda wants insurance companies to go public only after completing ten years of operations, insurance firms like Reliance Life have already applied to the government for initial public offering (IPO), on the the other hand, SBI Life is also looking for floating an IPO. It is expected to come up with the IPO once the government passes the Bill and HDFC Standard Life is mulling to go for listing in the next year only.

The valuation estimates of life insurance companies peg ICICI Prudential Life insurance at $ 3.67 billion, followed by SBI Life at $ 2.62 billion, Bajaj Allianz at $ 2.3 billion and HDFC Standard Life at $ 1.62 billion. Due to lack of disclosure norms, insurance companies do not disclose their embedded value of the assets. However, Irda is contemplating to make it mandatory for the insurance companies to disclose their embedded value.