Irdai rules out troubles for two insurance arms; asks insurers to write off exposure
Mumbai: The two insurance subsidiaries of the crippled mortgage lender Dewan Housing Finance (DHFL) are unlikely to be impacted by the ongoing bankruptcy proceedings of their parent as they continue to have adequate solvency ratios, Irdai chairman SC Khuntia said on Friday.
He also asked insurance companies to write off their exposure to the bankrupt DHFL as they did in case of IL&FS.
DHFL, admitted for bankruptcy proceedings on December 3, has two insurance joint ventures -- DHFL Pramerica Life Insurance and DHFL General Insurance.
DHFL Pramerica Life, launched in 2008, is a joint venture between DHFL Investments, a wholly-owned arm of DHFL, and Prudential International Insurance Holdings of the US, has Rs 4,675 crore assets under management and employs 3,100.
DHFL General Insurance, on the other hand, is a fully-owned subsidiary of Wadhawan Global Capital, the holding company of the HDFL Group, and manages $18.6 billion assets through its lending, investment and insurance platforms.
"Right now, their solvency ratios are up to mark and so there is no issue," Khuntia told reporters on the sidelines of an Assocham event.
As of September, DHFL Pramerica Life's solvency ratio stood at 388 percent and that of DHFL General Insurance at 230 percent, according to the public disclosures made by them.
The regulator-mandated solvency ratio is 150 percent.
"Even if the parent company goes for liquidation, it will be sold and somebody else will take over. So, DHFL's share in these insurance companies will be transferred to the new owners," he said and assured that no policyholders will be affected during the process.
However, Khuntia asked insurers to write off their exposures to the housing finance company in the similar manner as they followed in the case of the now bankrupt IL&FS. "There is a procedure for how the exposures to DHFL is to be written off and when...they will have to follow that," he said.