According to the draft regulations, General
insurers planning to enter capital market to raise funds should have a
10 year experience
According to the draft regulations issued recently by IRDA (Insurance Regulatory and Development Authority) on Issuance of Capital by General Insurance Companies, general insurers planning to enter capital market to raise funds should have a 10 year experience and will have to seek prior approval from IRDA.
The approval granted by IRDA shall have a validity of one year from the date of issue of the approval letter, within which the applicant company shall file the Draft Red Herring Prospectus (DRHP) with SEBI under IRDA (Issuance of Capital by General Insurance Companies) Regulations, 2012.
The draft norms further said that the regulator would take into account the insurer's financial position, its capital structure and regulatory record before permitting them to come out with the share sale.
IRDA will also consider the insurers record of policyholder protection, compliance with the Corporate Governance Guidelines and the maintenance of the prescribed regulatory solvency margin among other things. Further, IRDA has kept with it the powers to prescribe the extent to which the promoters shall dilute their respective shareholding and the shares that can be allotted to foreign investors. IRDA would also prescribe the minimum lock-in period for the promoters after the share sale. The IRDA would also look into the purpose for which the insurer is proposing to raise the funds from the market and the insurer's capital structure.
The regulator has also prescribed additional information—risk factors specific to insurance companies, an overview of the insurance industry and a glossary of terms used in the insurance sector—in the offer document for companies to come out with share sale offer.
The draft guidelines concluded that the IRDA shall process and grant approval on the application as expeditiously as possible, and the applicant company shall ensure prompt response to the queries and requests for information from the Authority for processing the application.
According to the draft regulations issued recently by IRDA (Insurance Regulatory and Development Authority) on Issuance of Capital by General Insurance Companies, general insurers planning to enter capital market to raise funds should have a 10 year experience and will have to seek prior approval from IRDA.
The approval granted by IRDA shall have a validity of one year from the date of issue of the approval letter, within which the applicant company shall file the Draft Red Herring Prospectus (DRHP) with SEBI under IRDA (Issuance of Capital by General Insurance Companies) Regulations, 2012.
The draft norms further said that the regulator would take into account the insurer's financial position, its capital structure and regulatory record before permitting them to come out with the share sale.
IRDA will also consider the insurers record of policyholder protection, compliance with the Corporate Governance Guidelines and the maintenance of the prescribed regulatory solvency margin among other things. Further, IRDA has kept with it the powers to prescribe the extent to which the promoters shall dilute their respective shareholding and the shares that can be allotted to foreign investors. IRDA would also prescribe the minimum lock-in period for the promoters after the share sale. The IRDA would also look into the purpose for which the insurer is proposing to raise the funds from the market and the insurer's capital structure.
The regulator has also prescribed additional information—risk factors specific to insurance companies, an overview of the insurance industry and a glossary of terms used in the insurance sector—in the offer document for companies to come out with share sale offer.
The draft guidelines concluded that the IRDA shall process and grant approval on the application as expeditiously as possible, and the applicant company shall ensure prompt response to the queries and requests for information from the Authority for processing the application.
