The Insurance Regulatory and Development Authority (Irda) has directed new insurance companies to close their books on March 31, in line with the fiscal year ending. The move is with a view to help the regulator come out with comparative data on the industry.
The directive issued to ICICI Prudential Life Insurance Company will also have a bearing on HDFC Standard Life Insurance Company, both of which commenced their operations in December 2000, and had proposed to close their accounts in December 2001. The two companies will thus have to revise their internal targets, bringing the figures to meet a 15-month period instead of the initial 12-month.
Closing the books in December was a logical move since it would give the entities three months to undertake computation and accounting, before they merge their results into those of their Indian parent companies -- ICICI Ltd and HDFC Ltd.
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Irda, however, told ICICI Prudential that, should it choose to close its accounts in December, it would have to come out with a March ending audit as well for regulatory reporting and valuation.
"We have decided that it is more painful to undertake two audits and, hence, we will close our year in March," said ICICI Prudential Life Insurance Company managing director Shikha Sharma. Sharma said ICICI Prudential Life would have to further enhance and automate the system to meet the deadline in valuation computation required for ICICI's balance sheet.
"There is a pressure on us to get our compilation ready as it takes time to calculate the asset-liability match and future liabilities, which have to be backed with relevant assets," added company officials at HDFC Standard Life.
Officials stated that the UK-based Standard Life Insurance Company closes its books in November, which gives it time to declare its performance by March-April the following year. "Of course, its results are more complex and in keeping with its operations," they said.