Regulators swing into action

Irda seeks reports from Tata, AIG

Amid the continued uncertainty over the capital constraints faced by the world’s largest insurer American International Group (AIG), the Insurance Regulatory and Development Authority (Irda) today said asked the Tatas and the US giant, which have joint ventures for life and general insurance business in India, to submit reports on the latest global developments.

“The accounts of these two companies as on March 31, 2008, indicate that both companies have satisfactory solvency margins, which are adequate to meet their liabilities. However, having regard to the developments reported in (the) USA, Irda has asked for the reports of the companies in the matter,” the insurance regulator said in a statement today.

 

Irda Chairman J Hari Narayan told Business Standard that he expected a report from the partners over the next two-three days.

The Tata group holds 74 per cent in the life and non-life insurance ventures, while AIG has the remaining 26 per cent stake. Both ventures were among the first private insurance companies to receive the regulatory go-ahead to start operations and were registered with Irda in early 2001.

Irda’s action comes after global rating downgrades, which are expected to make fund-raising tougher for the US company. AIG India representatives did not respond despite repeated attempts to contact them.

Tata-AIG Life Insurance reported a 69 per cent rise in first year premium to Rs 260.63 crore during April-June 2008-09 and was placed eighth among the 20 players in the segment. During the first quarter, Tata-AIG General Insurance saw its premium gross underwritten premium grow 23.58 per cent to Rs 368. 46 crore.

In addition interests in the two insurance ventures, AIG also has a controlling stake in a consumer finance unit called Vivek Hire and Purchase, a private equity arm and an asset management company called AIG Global AMC.