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Report on Public Issues by Insurance Companies SEBI Committee on Disclosures and Accounting Standards (SCODA) Page | 1 Table of contents Section No Section Page Number 1 Background 3 2 Constitution of the Sub-group 3 3 Scope of the Sub-group 4 4 Recommendations of Sub-group 4 5 Other issues raised by IRDA 10 List of Annexure Annexure Details of Annexure Page Number No. Annexure I Industry specific risk factors for insurance sector 13 Annexure II Overview of Insurance Industry 21 Annexure III Comparison table on disclosures made in offer 23 documents of life insurance companies in other jurisdictions Annexure IV Glossary of terms used in Insurance Industry 29 Page | 2 Public Issues by Insurance Companies 1. Background: 1.1. There have recently been media reports that insurance companies in India are planning to raise money from the capital market through initial public offers. Till now, no company from the insurance sector has accessed the capital markets in India. Since the nature of business and risks involved in insurance sector are of a different kind, it was felt that there is a need to review whether the present disclosure requirements in offer documents as well as those on a continuous basis are suitable and sufficient for the insurance companies. 1.2. In this context, SEBI has been in receipt of suggestions/ observations from merchant bankers and international consultants on additional insurance sector-specific disclosures. SEBI has also received suggestions/comments from IRDA on the disclosures in offer documents by insurance companies. The areas of disclosures as identified taking into account the practices followed in other jurisdictions and suggestions/ comments of the merchant bankers and IRDA were discussed in the SEBI Committee on Disclosures and Accounting Standards (SCODA) in its meeting held on August 24, 2009. 1.3. SCODA during its deliberations suggested that the suitability/sufficiency of the existing provisions of SEBI (ICDR) Regulations to insurance companies may be examined. 2. Constitution of the Sub-group: 2.1.In order to examine the extant regulatory requirements vis a vis the disclosure requirements for insurance companies, SCODA decided to constitute a sub-group comprising following members: Sl Name Designation Organization 1. Ms. Dipti Neelakantan MD & Group COO JM Financials Ltd 2. Shri Prithvi Haldea CMD Prime Database Ltd 3. *Shri R K Sharma Deputy Director Insurance Regulatory and Development Authority Page | 3 Sl Name Designation Organization (IRDA) 4. Dr. S. Subramanian Head, IBD Enam Securities Ltd 5. Shri Shrawan Jalan Director Ernst & Young 6. *Shri Sunil Kadam General Manager Securities and Exchange Board of India (SEBI) * Shri R K Sharma, Deputy Director, IRDA and Shri Sunil Kadam, General Manager, SEBI replaced Ms Mamta Suri, Joint Director, IRDA and Shri Parag Basu, General Manager, SEBI, respectively due to internal changes in their respective organizations. 2.2 The group places on record its appreciation for the valuable contribution made by Ms Lakha Nair, Enam securities Ltd, Shri Sanjay Purao, Deputy General Manager, SEBI and Shri E Balasubramanian, Assistant General Manager, SEBI in preparation of this report. 3. Scope of the Sub-group: The following scope of work was identified by the sub-group: i. Provisions of SEBI (ICDR) Regulations vis a vis insurance companies ii. Disclosures by insurance companies iii. Continuous disclosure requirements for insurance companies 4. Recommendations of Sub-group 4.1. Amendment to SEBI(ICDR) Regulations The provisions of SEBI (ICDR) Regulations have been examined primarily with regard to its suitability and sufficiency with respect to disclosures by insurance companies. The provisions of SEBI (ICDR) were discussed. The sub-group agreed that the provisions of SEBI (ICDR) Regulations shall be applicable to insurance companies. The sub-group after deliberations gave their comments on certain provision of the SEBI (ICDR) Regulations along with the recommendations. The recommendations of the sub-group are as follows: Page | 4
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