National Insurance IPO gets Irda nod

Mumbai: The Insurance Regulatory and Development Authority (Irda) has given its in-principle approval to the National Insurance Company to list its shares, as the state-run insurer has strengthened its balance sheet and improved solvency margins.

Kolkata-based National Insurance will become the second state-run general insurer to list after New India Assurance, and investors may value the company at Rs 25,000 crore. National Insurance had approached Irda for approval to list in October this year.

“We have received in-principle approval from the regulator to list the company and should be hitting the market by the end of this financial year or the early part of the next financial year,”said K Sanath Kumar, chairman, National Insurance Company. “The price and percentage dilution will be worked out by the ministry.”

The staterun insurer’s solvency margin rose to 1.90 from 1.26 in the previous year. Solvency for insurers is similar to capital adequacy for banks.

A 15 per cent divestment could fetch the government Rs 3,750 crore, equity analysts estimate. The company would be valued at Rs 25,000 crore based on its investment book, net worth and real estate assets. These are estimates and the final valuation, linked to market conditions, could be vastly different from what is being discussed now.

ICICI Lombard became the first general insurer to list this year and is trading at a market value of Rs 32,000 crore after its IPO scraped through.

General Insurance Corporation and New India Assurance later hit the market by diluting 14-15 per cent stake each. They are trading below the issue price.

Kumar said he expects gross premiums to increase by 15 per cent over the next couple of years, with higher contributions from the health and motor businesses.