New Delhi: Embattled Sahara group on Sunday said it will approach court of law against IRDAI order directing transfer of its life insurance business to ICICI Prudential and alleged that the insurance regulator has "wrongly concluded" that the promoter was no more 'fit and proper' and a sum of Rs 78 crore was siphoned.
In a statement following IRDAI (Insurance Regulatory and Development Authority of India) order dated July 28, the group said Sahara Life business is being "wrongfully" given to ICICI Prudential Life Insurance.
"Sahara Life is doing business since 2004 and since last 7 years running continuously in profit and has been in absolute and strict compliance of all regulatory norms and directions issued by IRDAI," the group said.
It further said Sahara Life's asset is more than its liability and there is not a single complaint of non-payment by any policy holder.
"However it is unfortunate that IRDAI has handed over Sahara Life business to other insurance company ICICI Prudential," the group alleged.
Giving a point-wise rebuttal to the charges on IRDAI, the group said the main allegation talks about the promoter company's promoter shareholder Subrata Roy Sahara, having been incarcerated, which was a judicial custody, and therefore the promoter company of life insurance venture is no more "fit and proper".
This was also the reason of action against Sahara Mutual fund by another regulator SEBI. The group had challenged this SEBI order before the Securities Appellate Tribunal which last week upheld the regulator's order but granted a stay of 6 weeks to allow the company file an appeal before the Supreme Court, which is already hearing a long running case regarding the group.
On IRDAI action, the group said the second allegation is that a sum of 78 crore has been siphoned, "which is wrongly concluded".
"In fact this amount was kept as security deposit to one entity Sahara India who has provided furnished, computerised office accommodation in around 150 places," the group said.
It further said the security deposit is there since Sahara India is not charging any rent, electricity charges etc and this arrangement is very beneficial for Sahara Life, whereas IRDAI has concluded in "such unwise manner".
"This security deposit amount is absolutely repayable to Sahara Life," the statement added.
The group further alleged, "On one hand IRDAI didn't give permission for branch expansion and now IRDAI is alleging that business is not increasing. "IRDAI appointed administrator for the reason best known to them and the said administrator secretly submitted a report to the IRDAI for transferring the business of Sahara Life to any other entity," it added.
The group further alleged that any copy of the administrators report was neither provided to Sahara Life, nor was it granted any opportunity of hearing on such report or before passing the order of transfer of business to any third entity.
"The company has never acted in any manner prejudicial to the interest of the policy holders. Sahara will pursue its remedy, against such approach of IRDAI, in the court of law," the statement added.
Insurance regulator IRDAI on Friday asked leading private sector life insurer ICICI Prudential Life Insurance (IPRU) to take over the business of beleaguered Sahara India Life Insurance with effect from July 31.
ICICI Prudential was asked to ensure that systems are integrated within a period of one year from the appointed date. Sahara group chairman Subrata Roy had met IRDAI chairman to seek more time to resolve the crisis at his life insurance arm on July 24.
ICICI Prudential had submitted a valuation report to the regulator to take over the company on the same day. It was last month that IRDAI had appointed an administrator to run Sahara Life, alleging governance-related issues at the company.
Based on the administrator report dated June 22, IRDAI came to the conclusion that continuation of Sahara India Life to transact life insurance business is not in the interest of the holders of life insurance policies in general, and considered it to be a fit case to transfer the life insurance portfolio of Sahara India Life to some other insurer under section 52B (1) of the Insurance Act, 1938, the order said.
According to IRDAI, the report of the administrator indicated that there is total failure of the governance system of Sahara India Life and the interests of the policyholders are at stake.
Promoters of the company are no more fit and proper, a sum of Rs 78 crore has already been syphoned off in name of security deposits, and the shareholders and board of directors are not keen on recovery plan, the report said.
Moreover, the IRDAI report said, the company is mainly surviving on release of reserves and the situation may not continue for long as the new premium of the company has come down significantly.
ICICI Prudential has been asked to assume the insurance liabilities of Sahara India Life as per the valuation of the independent actuary as on the appointed date.
The order said Sahara India Life shall transfer the assets/investments to ICICI Prudential on irreversible basis. ICICI Prudential Life on Friday said in a statement that it has received an order from IRDAI directing it to take over the assets and policyholder liabilities of Sahara Life Insurance.
The company clarified that this is not a merger between the two companies but purely a transfer of customers to ICICI Prudential Life.
We are pleased to welcome the new customers to the ICICI Prudential Life family. We would like to assure them of high levels of service and commitment, it said....