The Hindu Business Line : Insurance cos’ exposure in Satyam could be Rs 1,200 crore

Hyderabad, Feb. 10 The Insurance Regulatory and Development Authority (IRDA) does not see any major concern in the exposure of insurance companies to the scam-hit Satyam Computer Services.

“Since all the investments were done by the insurance companies within the guidelines prescribed to them, the regulator does not see the exposure as an issue which would cause concern,” Mr J. Hari Narayan, Chairman of IRDA, told Business Line here on Tuesday.

The IRDA last month had asked companies to disclose the exact amount they pumped into Satyam after its former Chairman, Mr B. Ramalinga Raju, confessed to have fudged the balance sheets of the company since 2001.

Mr Narayan, however, said that since it was client-sensitive information, the regulator would not be in a position to disclose the investment of each company, the pattern and so on.

Industry estimates, however, point out that the exposure of insurance companies in Satyam could be between Rs 1,100 crore and Rs 1,200 crore.

Life Insurance Corporation (LIC) and ICICI Prudential Life Insurance, together hold about 6.81 per cent in Satyam. While LIC holds 4.34 per cent, ICICI Prudential has around 2.47 per cent.

“We also need to assess the impact of the exposure to Satyam on their balance sheets. But our approximation is that the exposure will only have a marginal impact on the solvency margins of the insurance companies,” said Mr Narayan.

He added that the final picture will be known only after the actuarial assessment is done at the end of the current financial year.

“Although policy-holders bear the investment risk, stock selection and sector selection have to be given prudential treatment at all times. Hence, there is a need to measure the impact of recent developments on the net asset value (NAVs) of various funds maintained by insurers,” Mr Narayan said.