The insurance market in India has seen rapid growth and development since 1999, when it was opened up to private investment after two and a half decades as a nationalised industry. Foreign companies have taken advantage of the opportunities presented by this market, but their participation has been limited by Indian regulation.
Recently, however, there has been some deal activity in the sector with Mitsui Sumitomo picking up New York Life's stake in the Max New York Life Insurance joint venture. In addition, on December 1, 2011, the Insurance Regulatory and Development Authority of India ("IRDA") notified the IRDA (Issuance of Capital by Life Insurance Companies) Regulations, 2011 (the "Regulations") which allow life insurance companies in India to go public. Public offerings will be subject to regulation by both IRDA and the Securities and Exchange Board of India ("SEBI"). IRDA will determine if the company meets the qualification requirements of going public and SEBI will evaluate whether disclosure in the issuer's draft red herring prospectus ("DRHP") meets the requirements of the SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2009 (the "ICDR Regulations"). With foreign direct investment in the sector still limited to 26%, insurers may soon look to the equity markets to raise capital.
This article assesses the new legislation and the potential consequences.