Though the experts are hoping that the IPOs of New India Assurance and General Insurance Corporation of India (GIC Re) will be coming out in the current financial year, but as per the latest IPO news, it has conferred that the IPOs of the three public sector general insurers may be delayed to come out in the second half of the financial year 2019. The ones that are pushed to the year FY2019 are the initial public offerings (IPOs) of National Insurance, United India Insurance and Oriental Insurance which are at least delayed to the second half of the next financial year.
The Indian government had permitted for the listing of state-owned general insurers. But the reason that has known to cause the delay is the solvency dropping below 150% for the two insurers. The government wishes to give them some more time to better themselves and also to have a good gap between the issues.
As the share market news confirms, the National Insurance had the minimum solvency drop below 150 percent which it had pulled it back to 190 percent by the end of the Q4 of the last financial year. But the rule says, all the insurers are expected to maintain a solvency capital of 150 percent under all circumstances. Especially for the large issues, it is utmost important to stick to the regulatory rules on the capital will be crucial. Therefore, they are given a timeline of 3 years so that they have enough time to bring it up. This will also help the insurers to get a proper valuation.
The Oriental Insurance also had a solvency below 150 percent which stood at 111 percent in the current financial yearFY17. In the Q1 of this financial year, their solvency stood at 118 percent.
Talking about United India, they had a solvency of 115 percent for the current fiscal. The National Insurance has a solvency that was at 169 percent for the first quarter of the financial year of 2018. Though it is not mandatory to have a 150 percent solvency to get it listed on the stock exchanges, but the Indian government has still decided to give them some more time to accumulate their capital. When they come quite close to the regulatory limit, they might have their listing.
The Chairman of the Insurance Regulatory and Development Authority of India (IRDAI). Mr. TS Vijayan had said that while solvency has gone down to below 150 percent for some of the insurers, but they have given some time to these insurers to accumulate their capital to 150 percent.
The IPOs of New India Assurance and General Insurance Corporation of India (GIC Re) have already filed their draft papers with Securities and Exchange Board of India (Sebi) for their proposed IPO and will come out in this year any time.
The government may also be doing this to maintain the investor appetite as too many IPO’s in quarter may disturb them.
