Reliance Capital lenders approve Rs 200 crore capital infusion in Reliance General

economictimes.indiatimes.com:

Reliance General Insurance will soon receive an equity infusion of Rs 200 crore from its parent Reliance Capital which is undergoing bankruptcy proceedings, said people aware of the development. The committee of creditors of Reliance Capital approved last week a proposal to infuse capital – a move that would help the private insurer to retain its market share in the non-life industry. Reliance General Insurance is the most valuable asset through which lenders hope to recover a substantial part of their dues, and any dip in its valuation would correspondingly lower the company's valuation, said one of the lenders.

Reliance General had earlier said that the capital infusion was crucial to increase its solvency margin to 175% from 155%. The Insurance Regulatory and Development Authority (IRDA) requires companies to maintain a minimum solvency margin of 150%. Although the private life insurer is profitable, the insurance laws pertaining to solvency margins require companies to increase their capital as their business grows.

In December, Reliance General Insurance sought Rs 600 crore from the parent to retain its market share. Reliance General Insurance is considering raising the balance of Rs 400 crore by issuing Tier II bonds, the people cited above said. Reliance General is among the 20 financial services companies owned by Reliance Capital- an Anil Ambani Group Company.