The insurance regulator has not yet sought details of the exposure of insurance companies to home financier Dewan Home Finance Ltd (DHFL) even as insurers have adopted caution while dealing in NBFC securities.

“As of now, the Insurance Regulatory and Development Authority of India has not asked us for details of our investments in DHFL,” said an executive with an insurance company, adding that they are closely monitoring the situation.

“For the sector, it’s not too much of a concern as the rating is still AA+. We have been given to understand that the company still has sufficient liquidity,” he added.

Another insurer also echoed similar sentiments, adding that they are checking the situation on a daily basis.

Care Ratings had, on February 3, downgraded DHFL’s non-convertible debentures and long term bank facilities to AA+ from AAA. In all, it revised ratings for nearly ₹1.2 lakh crore of outstanding securities of DHFL on concerns over its ability to raise funds at competitive rates.

Since then, the home financier has also held an investor call to ease any concerns. At present, there are no exact estimates of exposure of insurers to DHFL.

IL&FS fiasco

However, after trouble arose at Infrastructure Leasing and Finance Company (IL&FS), most insurers have become cautious in buying securities of non-banking finance companies (NBFCs) on concerns over asset-liability mismatch.

“Most insurers have become cautious as the money we invest is the money of our policyholders and will have to be returned at a later date,” said the first executive, adding that now there is a dearth of good investment opportunities.

IRDAI has already asked insurers for their exposure to IL&FS and has said that they will have to make provisions for it and it cannot be written off.

Last week, IRDAI Chairman Subhash Chandra Khuntia has said that insurers should not concentrate risks in a few entities and must diversify investments.

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