Insurance sector regulator Irdai has allowed foreign reinsurance branches, including Lloyd’s India, to repatriate up to 20% of the excess assigned capital to attract more players and allow free movement of capital.
As part of the ease of doing business in India, various committees deliberated on the repatriation of excess assigned capital by Foreign Reinsurance Branches (FRB) and Lloyd’s India.
As per Irdai norms, the registration of branch offices of foreign reinsurers other than Lloyd’s have ‘assigned capital’ and net owned funds (NOFs) as the capital requirements for setting up business in India.
The applicant’s NOF should not be less than the prescribed amount of Rs. 500 crore at any time and should infuse a minimum assigned capital of Rs. 100 crore into the branch office.
After careful examination of the recommendations of the working groups, it is noted that to ensure sufficient reinsurance capacity in India and to attract more reinsurance players for offering reinsurance at a competitive price, the free movement of assigned capital for foreign reinsurance branches is required.
“Accordingly, it is decided that FRBs and Lloyd’s India are permitted to repatriate excess assigned capital with prior approval of the Authority,” the Insurance Regulatory and Development Authority of India (Irdai) said in a circular.
However, the relaxation comes with certain riders such as a minimum assigned capital of Rs. 100 crore or a higher sum specified by Irdai at the time of grant of certificate of registration; submission of a request justifying the reasons for repatriation and a certificate stating foreign reinsurers’ net owned funds of Rs. 5,000 crore or as prescribed under the Insurance Act.
