National Insurance Company picks out assets to sell amid poor solvency
National Insurance Company, which is grappling with a severe solvency shortfall of ₹8,000 crore, with its solvency margin standing at a negative 0.49%, far below the regulatory minimum of 1.5%, has identified several key assets to address the gap, according to people familiar with the matter.
Among these are its stake in Agriculture Insurance Company, a 20% stake in India International Insurance Singapore valued at about $500 million (about ₹4,000 crore) and a joint venture in Kenya, they said, adding that though the insurer has identified these assets, it is yet to start the process and seek necessary approvals to proceed with any sales.
While the Insurance Regulatory and Development Authority of India (Irdai) has granted the company forbearance and it has no immediate pressure to liquidate assets, the insurer is hopeful that the transition to a risk-based capital framework, expected in the coming few quarters, would provide relief by improving the valuation of its assets, according to the people.
«National Insurance needs ₹8,000 crore to bring its solvency margin back to 1.5%,» said one of the persons, who did not wish to be identified.
The insurer believes that the risk-based capital framework could unlock ₹6,000 crore in fair value changes (base case), a substantial revaluation of its assets. «Currently, some assets on its books are valued at just ₹500 crore but could be revalued at much more,» the person said.
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