Insurance Regulatory and Development Authority (Irda) will ask companies to disclose their Ulip (unit-linked insurance plans) exposure to all firms.
“If the exposure of individual insurance companies exceeds 0.25 per cent of the assets under management, insurers will have to inform the regulator,” an Irda official said.
The move comes in the wake of the confession of wrong-doings and manipulating the books of Satyam Computer Services by its founder B Ramalinga Raju.
The two largest life insurance companies – Life Insurance Corporation and ICICI Prudential Life Insurance – together hold 6.81 per cent stake in Satyam who share price has plunged over 79 per cent since Raju made the disclosure on January 7. Today, Satyam’s shares, which are no longer part of the indices, rose 44 per cent to close at Rs 34.40 on the Bombay Stock Exchange.
The fall in share prices will also hit the net asset value of the Ulips sold by the insurance companies.
The regulator was working on the seeking the details ever since the fraud came to light but the details of the queries to be sought from the insurance companies.
Sources at the regulatory agency said that insurance companies need to submit the by February 10.
In the wake of the falling equity markets, the net asset value (NAV) of various unit linked plan (Ulips) declined by over 25-30 per cent.
Earlier, insurance regulator has asked life insurance companies to disclose their investments in December.
Insurance companies are asked to disclose investments on a quarterly basis.
In case of Ulips, where a bulk of the investment flows into equities, companies are parking as much as 90-95 per cent of the funds in stock markets.
Irda’s investment norm allows insurance companies to invest at least 50 per cent of the funds in government approved securities, 15 per cent in infrastructure, while up to 35 per cent can be invested in equities. It allows insurers to buy up to 10 per cent in a single company.
It has, however, relaxed the exposure limits in a single infrastructure company to 20 per cent from 10 per cent to help cash-strapped sectors.
The investment guideline allows insurers to invest in assets or instruments not less than grade “AA” as per their current rating.
The investment in Satyam has also brought the role of rating agencies under scanner. Irda has decided to take up the issue at a committee constituted by the government.
