Indian operations safe from AIG crisis: IRDA

17 September 2008

The Indian insurance regulatory body, the Insurance Regulatory and Development Authority, has said that it did not expect any immediate threat to the Indian operations of troubled insurer AIG.

AIG has joint ventures with India's Tata Group for both life and general insurance businesses. Both are run as independent joint venture companies, in the name of Tata AIG Life Insurance Co Ltd and Tata AIG General Insurance Co Ltd.

AIG holds 26 per cent in each of the companies, which is the maximum limit permissible as per Indian regulations.

Though IRDA said that there was no immediate threat to the Indian operations of AIG, there could be repercussions in around a year if there was any disruption in capital flow to the two joint venture companies.

The present solvency margins of the joint ventures insurance company of Tata AIG is at a comfortable 2.3, well above the mandated 1.5.

Business projections and the capital infusion plan of the company are also of relatively smaller amounts. Moreover, AIG has to provide only 26 per cent of those, in line with its shareholding.