• Investment World
• eWorld
• Brand Line
• Mentor
• Life
• Brand Quest
• The New Manager

Stocks

• Quotes
• SE Diary
• Scoreboard
• Open-End Mutual Fund

Cross Currency

• Rates
  
  

Shipping

• Ports
  
  

Archives

• Yesterday
• Datewise
• Resources
• In Focus
• In Depth

Group Sites

• The Hindu
• The Hindu ePaper
• Business Line
• Business Line ePaper
• Sportstar
• Frontline
• The Hindu eBooks
• The Hindu Images

Our Bureau

Mumbai, Dec 13 The Insurance Regulatory Development Authority may soon allow insurers more flexibility in investing in highly rated initial public offerings.

Currently, initial public offerings (IPO) fall within the ‘other than approved’ category and the insurance regulator could now look at making it easier for insurance companies by putting highly rated IPOs within the ‘approved’ category of investments.

“Insurers could be given the flexibility to invest in highly rated IPOs, as approved by SEBI,” said Mr C.R. Muralidharan, Member, Insurance Regulatory Development Authority, speaking to reporters on the sidelines of an insurance seminar organised by ICICI Securities.

Instruments like mortgage based securities and highly rated infrastructure bonds may also make the cut as “approved investment”.

“Infrastructure and mortgage based securities have shown low defaults and high yields,” Mr Muralidharan said.

The Insurance Advisory Committee is likely to meet in January to amend the existing regulation and issue new guidelines.

On the new entrants to the insurance sector, Mr Muralidharan said that in the next one year the IRDA expected another 10 companies to join the fray, five in the life segment and five in non-life.

Speaking at the seminar, Mr Muralidharan said that the regulator was also studying the current capital structure followed by insurance companies in the context of international practices.

Insurance companies have been asking the regulator for more options to raise capital. In a meeting held a few days ago, companies have asked the IRDA to revisit the existing norms concerning capital. Currently, equity is the only form of capital that companies can have access to.

Also speaking at the seminar, Mr Deepak Satwalekar, Managing Director and CEO, HDFC Standard Life, said, “Fulfilling the capital requirement is a significant issue and insurance companies have been discussing this with the regulator. The regulator could look at options like allowing hybrid capital, moving to a risk-based capital system, leveraging reinsurance and securitising liabilities.”

Insurers have to maintain a solvency of 150 per cent across all products, which they find very stringent.

“Capital is certainly a problem. As an investor, I will think twice about capital efficiency if the solvency margin is 150 per cent,” said Mr Sunil Kakar, Chief Financial Officer, Max New York Life Insurance.

More Stories on : Insurance | IPOs | Regulatory Bodies & Rulings

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
Corporation Bank offering ‘financial health check-up’

Copyright © 2007, The Hindu Business Line. Republication or redissemination of the contents of this screen are expressly prohibited without the written consent of The Hindu Business Line