Insurer allowed to raise up to ₹488 crore.
Tata AIA Life Insurance is evaluating sources to raise subordinated debt to ₹488 crore to meet challenges on the reinsurance front along with higher COVID-19 claims than anticipated.
“We have got approval from IRDAI for raising subordinate debt of ₹488 crore, which we are in the process of arranging,” MD and CEO Naveen Tahilani said in an interaction here on Wednesday.
Various options are available and are being studied by the insurer, whose decision to raise capital, for the first time since inception, comes amid COVID claims in 2020-21, which push the total claims up by almost 35%. “This [financial] The year has been very bad… our claim experience has been twice as normal as the second wave peaks [of pandemic] It was fast,” he said.
He said the IRDAI approval came in October and the company has six months to raise the debt.
Raising capital has become imperative in the context of drying up of reinsurance supplies, Mr Tahilyani said, pointing out that this translated into higher retention limits for the insurer and could result in increased premiums for the insured.
Negotiations are on with reinsurers seeking higher rates.
Life insurers are urging reinsurers to separate the COVID experience from the normal experience and take a long-term approach instead.
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