By Arvind Padmanabhan, IANS,
New Delhi : India’s insurance watchdog Tuesday said it was probing the impact of the crisis being faced by the US-based financial services giant American Insurance Group (AIG) on its two Indian ventures with the Tata group.
“We are looking at what impact the developments overseas will have on both the life and non-life business of AIG in India,” said R. Kannan, member-actuary with the Insurance Regulatory and Development Authority of India (IRDA).
“So far, what we have found is: Both the ventures – Tata AIG Life Insurance and Tata AIG General Insurance – are complying with the solvency requirement,” Kannan told IANS over phone from Hyderabad.
AIG has a 26-percent equity each in the two ventures, while the rest is held by the Tata group – India’s largest private sector business house with a combined turnover of $62.5 billion from as many as 96 companies.
Officials at the regulatory authority also explained that the Tatas have also given an undertaking that in the event of additional capital being required in the two ventures, they had the financial muscle to meet the requirement.
“To assess the financial health of an insurance company, the regulatory has an instrument and that is the solvency ratio. We examine this on a quarterly basis. So far, we have not found any cause for concern,” Kannan said.
As per the norms laid down by the regulator, the assets of an insurance company must be at least one-and-a-half times more than its liabilities – that is a solvency ratio of 150 percent, officials explained.
The global financial markets were thrown into a tailspin Monday after news that Lehman Bros. was filing for bankruptcy, Merrill Lynch was being sold to Bank of America for $50 billion and AIG wanted $75 billion to dress its balance sheet.