Reliance Capital’s general insurance business seeks Rs 600 crores capital infusion

This capital infusion is necessary to sustain the business, enhance value and increase the company’s solvency from 155 per cent to around 175 per cent. 

Sources told TNIE that Reliance General Insurance has written a letter to the Reliance Capital administrator — Y Nagesh war Rao – seeking the Rs 600-crore capital support from the parent company — Reliance Capital — by 31 December 2022.

The general insurance company has said that the fund infusion is essential to preserve the business, enhance the value and take the company’s solvency from 155 per cent to about 175 per cent.

The company has in the letter said that the borderline solvency ratio (minimum solvency required by an insurance company is 150 per cent of the total insurance cover offered) has become an impediment for the business growth of the company as large corporate and government clients are showing hesitancy in doing business with it.

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Reliance General Insurance believes that the capital infusion from the existing stakeholders of the company will send a strong message of support to the market, and will allow it to outperform the market growth rate. 

It will also augment value creation and negate the risk of underperforming the broader markets.

According to sources, the Committee of Creditors (COC) is expected to consider and discuss the request of Reliance General Insurance for capital infusion in the meeting on 9 December 2022.

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