The insurance subsidiaries of Dewan Housing Finance (DHFL) do not have any liquidity concerns, said Subhash C Khuntia, Chairman of Insurance Regulatory and Development Authority of India (IRDAI). While the parent company DHFL is facing a debt crisis, Khuntia said that the insurance subsidiaries (DHFL Pramerica Life and DHFL General Insurance) have adequate solvency.
"There is nothing to worry. Right now they are in a comfortable position," said Khuntia.
In the life insurance business, DHFL has a joint venture with Pramerica where the latter holds 49 percent stake. In general insurance, DHFL holds 100 percent in the entity.
DHFL posted a loss of Rs 2,224 crore for the quarter-ended March 2019, which was dented by additional provisioning. It was the first quarterly loss reported by the company since its inception, as per records of its financials available on Moneycontrol since the June quarter of 1998.
The housing finance company in a statement to the stock exchanges on July 13 said it is undergoing substantial financial stress since the second half of the financial year.
Khuntia said that as part of their routine inspection of the insurer's records, the regulator did not find any financial constraints.
Insurers are required to hold a solvency of 150 percent at all times.
IDBI Bank stake reduction not finalised
With respect to the reduction of stake of Life Insurance Corporation of India (LIC) in IDBI Bank, Khuntia said that they have not yet finalised the deadline.
As per IRDAI norms, insurers are allowed to only hold 15 percent equity stake in an entity. A special dispensation had been given to LIC to hold 51 percent stake in IDBI Bank after the insurer bought stake from the government.
He added that the LIC will give a deadline which the IRDAI will look into.
New pilot for catastrophic risks
With the rise in the number of natural catastrophes in the country, Khuntia said that IRDAI is looking into the possibility of having a few pilot projects in vulnerable areas to offer property insurance.
A proper assessment of risks and decide on appropriate products would be taken, he added. The premium strucrure for BPL families could also be subsidised, according to Khuntia.
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