New insurance rules open fresh merger, listing routes

The amendment to insurance laws is expected to trigger a fresh round of consolidation and deal-making in the sector, alongside new capital inflows following govt’s decision to permit 100% foreign direct investment. According to Shivangi Sharma Talwar, partner at JSA Advocates and Solicitors, the amendments could materially alter the legal framework governing mergers in the sector. “With the amendments proposed under the new bill seeks to widen consolidation options by allowing insurers to merge with non-insurance cos to listing, while insurers may also be able to acquire service providers, it may become legally permissible for an insurer to amalgamate with a non-insurance entity. provided the scheme results in an insurance company as the surviving or resultant entity,” she said. She added that the impact will depend on regulations yet to be notified, particularly on the scope of non-insurance activities insurers may be allowed to undertake. Read more