The discussions between the insurance regulator and the capital markets regulator on initial public offering (IPO) guidelines for insurance companies appear to have got stuck in the regulatory turf war that has broken out between them over unit-linked insurance policies (Ulips).

The guidance note on market-consistent embedded value (MCEV) prepared by the Institute of Actuaries of India was submitted to the Insurance Regulatory and Development Authority (Irda) in mid-December 2009.

MCEV is meant to help in valuation of all the assets and liabilities of an insurance company on a mark-to-market basis. Embedded value also takes into account future business after making provisions for lapsation of policies, mortality charges and other expenses.

Since the valuation of a life insurance company is different from that of other companies, the guidance note had to be discussed with the markets regulator, the Securities and Exchange Board of India (Sebi), which regulates listing. “After the draft was submitted in December, a meeting was scheduled in January between the regulators that didn’t happen,” an actuary with a leading life insurance company said.

On December 28, Sebi had singled out HDFC Standard Life Insurance asking it why permission was not sought from it before launching their annuity product.

Irda had taken up the issue on behalf of all life insurance companies with Sebi. In January, Sebi sent a show cause notice to 13 life insurance companies questioning them about their Ulip products.

“The regulatory battle has delayed the IPO-related meetings between Sebi and Irda,” the chief executive officer of a Mumbai-based life insurance company told Financial Chronicle.

According to him, the deadline set by Irda (February end) to make public the final draft of the MCEV will hence not be met.

MCEV guidelines are part of the final IPO guidelines that the regulator is expected to come up with. According to the head of another life insurance company, the guidelines will take time to come and the final guidelines allowing insurance companies to get listed might take some time. “The guidelines could come only by May or June in the next financial year,” the executive said.