Insurer allowed to raise up to ₹488 cr.
Tata AIA Life Insurance is evaluating sources for raising subordinate debt up to ₹488 crore to shore up capital in the face of more-than-anticipated COVID-19 claims as well as challenges on the reinsurance front.
“We have an approval from IRDAI to raise subordinate debt of ₹488 crore, which we are in the process of organising right now,” MD and CEO Naveen Tahilyani said in an interaction here on Wednesday.
Different options are available and being studied by the insurer, whose decision to raise capital, for the first time since inception, comes amid COVID claims in 2020-21 pushing up total claims by about 35%. “This [financial] year has been much worse… our claim experience has been twice the normal because the peak in second wave [of pandemic] was sharper,” he said.
He said the IRDAI approval had come in October and the company has six months to raise the debt.
Raising capital has become imperative in the context of reinsurance supply drying up, Mr. Tahilyani said, pointing out that it translated into higher retention limits for the insurer and could result in increase in premium for the insured.
Negotiations with reinsurers, who are seeking higher rates, are underway.
Life insurers are urging the reinsurers to separate the COVID experience from normal experience and instead, take a long-term view.
For all the latest Business News Click Here
For the latest news and updates, follow us on Google News.
Denial of responsibility! NewsBit.us is an automatic aggregator around the global media. All the content are available free on Internet. We have just arranged it in one platform for educational purpose only. In each content, the hyperlink to the primary source is specified. All trademarks belong to their rightful owners, all materials to their authors. If you are the owner of the content and do not want us to publish your materials on our website, please contact us by email – [email protected]. The content will be deleted within 24 hours.
