Decision on PEs investing in insurance firms in a month: Irdai chief

PE firms have invested heavily in leading insurers such as SBI Life, ICICI Lombard, HDFC Life and Max Life

Expressing concern over private equity (PE) firms buying stake in insurance companies, Insurance Regulatory and Development Authority of India (Irdai) Chairman T S Vijayan on Friday said the regulator will come out with a decision on this in a month’s time. They have also formed a team to look into the matter legally.

“In insurance companies, we look at it in two different ways — investors and promoters. Anybody can invest in the company; for promoter, we are studying what is the feasibility, and if at all somebody is coming, what are the conditions that need to be in place,” Vijayan said.

PE firms have invested heavily in leading insurance companies such as SBI Life Insurance, ICICI Lombard General Insurance, HDFC Life Insurance and Max Life Insurance. The firms who have invested in these companies are KKR, Temasek, Warbug Pincus LLC, Clermont Group and Premji Invest. 

Speaking at the Assocham Global Insurance Summit, the Irdai chairman said, “In Irdai, we have things like 150 per cent of solvency margins irrespective of numbers etc. We are trying to move towards risk-based capital model. We have started forming a committee, taking opinions from industry and professionals. It will take time as it is not an overnight type of thing.”

With ICICI Lombard and SBI Life in line to get listed this year and HDFC life also looking to list its business in FY18, Vijayan said while it would be nice if the more than 50 insurance firms come to the market, the regulator wouldn’t force the companies to come out with an initial public offering.

Last August, Irdai had come out with a discussion paper on listing of all life and non-life insurance companies. The insurers, back then, had protested against the mandatory listing of insurance companies.

On the controversy surrounding the Pradhan Mantri Fasal Bima Yojana, where it was stated that insurance companies were reaping profits, the Vijayan said, “Pradhan Mantri Fasal Bima Yojana was a big success and has increased the insurance penetration to a great level. These types of schemes cannot be evaluated in one single year. It needs building up of reserves, reinsurance support and evaluation of the extent of damages....”