While the government is still deliberating on whether to allow insurance companies with less than ten years in operation to go public or not, the Institute of Actuaries has finalised initial public offer (IPO) guidelines for insurance companies. “The insurance regulator is likely to release these norms in a couple of days,” an official told The Indian Express. These norms will kick in the next stage for the insurance sector and set the floor for companies that wish to offload stake through public offers.

Barring a few, most companies in the country’s insurance space have 74 per cent stake held by the Indian owners and the rest by foreign partners. The inability of companies to raise capital through the foreign direct investment mode had led them to seek regulatory approval to being an IPO.

Lately, Reliance Life Insurance has shown interest in exercising this option. The company is a 100-per cent Indian subsidiary of an Anil Ambani group company and has been knocking at the doors of both the regulator and the government to seek approval. However, the government is yet to take a decision.

Meanwhile, these norms will at least help companies make accurate valuations. Unlike non-insurance companies that are valued according to their past performance, insurance companies have a notional value attached to them that essentially shows the company’s potential to earn in the future.

“The key feature to watch out for will be the method of calculation prescribed for calculation of embedded value of a company,” said Anish Thacker, director, Ernst and Young.

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