The Insurance Regulatory and Development Authority of India asked insurance companies to write off exposure to Dewan Housing Finance Corp. Ltd., which was admitted for bankruptcy proceedings on Dec. 3, The Free Press Journal reported.
IRDAI Chairman Subhash Chandra Khuntia reportedly said the procedure of writing off should be the same as the steps insurance companies followed in the case of the bankrupt Infrastructure Leasing & Financial Services Ltd. Insurers with exposure to Dewan Housing's nonconvertible debentures will reap benefits from the bankruptcy resolution as they will get their share from the sale proceeds, according to the chairman.
Dewan Housing's two insurance joint ventures, DHFL General Insurance Ltd. and DHFL Pramerica Life Insurance Co. Ltd., are not expected to be affected by the ongoing bankruptcy proceedings, considering their adequate solvency ratios, Khuntia said. DHFL Pramerica's solvency ratio is at 388%, and DHFL General's is at 230%, the publication reported, citing the joint ventures' public disclosures. The regulator-mandated solvency ratio is 150%.
DHFL Pramerica Life is a joint venture between U.S.-based Prudential International Insurance Holdings Ltd. and DHFL Investments, while DHFL General Insurance is a wholly owned subsidiary of Wadhawan Global Capital Pvt. Ltd.