Subrata Roy-promoted Sahara India Life Insurance Company Ltd. on Monday moved the Securities Appellate Tribunal (SAT) against the insurance regulator's orders to transfer the business to ICICI Prudential Life Insurance Company Ltd.,
The takeover, that was slated to be effective from Monday, July 31, stands suspended for a week as the SAT directed the insurance regulator to maintain a status quo on the matter. The tribunal has also sought a response from the Insurance Regulatory and Development Authority of India (IRDAI) by August 3 and will hear the matter on August 7.
The insurer has challenged the order on the grounds that its business has been continuously profitable and no policyholder has made claims of non-payment so far. The IRDAI's move is intended “to benefit a third party” and is in “violation of principles of natural justice”, Sahara Life said in a media statement on Monday.
The regulatory requirement of solvency margin is only 1.5, Sahara Life has been maintaining solvency margin of more than 8 which reflects the sound financial health of the company.Sahara Life Statement
Sahara Life had said on Sunday that its business was “wrongfully” given to ICICI Prudential Life by IRDAI. ICICI Prudential refused to comment on a BloombergQuint query since the matter is sub-judice.
IRDAI Cites Governance Irregularities
The IRDAI had cleared the takeover of Sahara Life by ICICI Prudential on Friday. The regulator “could not have waited for them to siphon off all the funds of policyholders, we took action as soon as we saw irregularities in their governance," Nilesh Sathe, member-life insurance and in-charge of finance and accounts at IRDAI told BloombergQuint on Monday. “This was done purely in the interest of policy holders and we would file a reply on the same on August 3 to SAT,” he said.
Sathe had also chaired the hearing on June 12 when the administration of Sahara Life was taken over by the IRDAI. The hearing was attended by Sahara Life's chief executive officer Sanjay Agarwal and General Manager RK Sharma among others.
The Sahara Group's fortunes tumbled after the Supreme Court sent its chief Subrata Roy to jail in March 2014 for not complying with orders to refund investors. The court had asked the group to repay over Rs 24,000 crore along with interest to more than 2 crore investors after the market regulator found that two group companies had illegally raised funds. The group has been trying to sell assets to raise capital.
Roy had met IRDAI chairman earlier seeking more time to resolve the crisis at his life insurance arm.
The regulator took over the management of the insurer in June saying it was “acting in a manner” prejudicial to the interest of subscribers. IRDAI appointed its general manager R K Sharma as an administrator to run Sahara Life due to governance-related issues at the Lucknow-based company.
Also Read: ICICI Prudential Gets Insurance Regulator's Nod To Take Over Sahara Life's Business
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