The insurance regulator IRDAI has directed ICICI Prudential Life Insurance to take over the business portfolio of Sahara India Life Insurance with effect from today. Challenging the order, the Sahara Group has said it will take legal action against the IRDAI.
The IRDAI took over the administration of Sahara on 12 June, in a first of its kind move in the insurance sector and ordered the company to stop issuing policies on 23 June. Subsequently, the IRDAI shortlisted six life insurers which could take over Sahara's business portfolio, and decided on ICICI Prudential which is also currently the only listed insurer in the country.
Sahara Group has been affected by financial troubles since its chairman Subrata Roy was arrested in 2014 in a case of the non-refund of almost INR200 billion (US$3.1 billion) to investors. Mr Roy met Mr TS Vijayan, IRDAI Chairman, last week in a bid to seek time to improve the financial position and corporate governance of Sahara. However, the regulator said that INR780 million had been siphoned off by Sahara in the name of security deposits. It also said that the promoters of Sahara are no more “fit and proper” persons, and ordered the transfer of all policies to ICICI Prudential.
Proposals for taking over Sahara's insurance portfolio were submitted by ICICI Prudential on 28 July. To facilitate the takeover process, the IRDAI has appointed an independent actuary to carry out the valuation of the insurance liabilities of Sahara.
The order related to the takeover said ICICI Prudential will assume the insurance liabilities of Sahara India Life as per the valuation of the independent actuary.
The IRDAI said that Sahara will be responsible for all other liabilities such as income tax, service tax, etc.
Sahara Group said yesterday that it will take legal action against the IRDAI for the decision to transfer of its life insurance business to ICICI Prudential. The company said that the insurance regulator has "wrongly concluded" that the promoter was no more 'fit and proper' and that INR780 million had been siphoned away.