Three state-owned non-life insurers fail to meet solvency requirements: RBI report
The solvency ratio for public sector non-life insurers’ group is sub-optimal with three of the four PSU insurers recording the ratio below the baseline prescription, the RBI said in its report released on Thursday.
The minimum solvency ratio requirement set by the Insurance Regulatory and Development Authority of India (IRDAI) for insurance companies in India is 150 per cent. The higher the solvency ratio, the better will be the ability of the insurer to meet its liabilities
The report also noted that the solvency ratio for life insurance companies has been above the prescribed threshold for both public sector and private sector at an aggregate level.
In case of mutual funds, the regulator’s analysis revealed stress including credit risk, interest rate risk, and liquidity risk in the case of 17 mutual funds.
In terms of schemes, however, only 24 out of a total of 299 schemes exhibited stress.
The assets under management (AUM) of the open-ended debt schemes, which were found to have experienced stress, amounted to Rs 1.7 lakh crore as against the total AUM of Rs 12.4 lakh crore for all schemes for which the stress testing was conducted .
Gross receivables of insurance companies was Rs 8.81 lakh crore and gross payables at Rs 0.58 lakh crore and were the second largest net providers of funds to the financial system as at end-September.
Long term debt and equity accounted for 91 percent of receivables of insurance companies with limited exposure to short term instruments. The report also notes that the share of long term debt has been increasing gradually, the share of equity has been falling.
Gross receivables of AMC-MFs stood at Rs 14.84 lakh crore (around 33 per cent of average AUM).
