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Reliance General Insurance, a subsidiary of Reliance Capital has sought a capital infusion of Rs 600 crore from its holding company to improve its solvency level.
Reliance Capital is undergoing bankruptcy proceedings since November 2021 after defaulting on loans worth Rs 24,000 crore. The main reason for the urgent need for capital is the delay in Reliance Capital's resolution process. Both Torrent and Hinduja group have made offers for Reliance Capital and the matter is currently pending with the appellate tribunal.
In its December quarter results presentation, Reliance General Insurance said that to take its solvency level from the current 155 per cent of statutory requirements to about 175 per cent, it urgently requires capital support.
The company said it's borderline solvency is creating hesitation among corporate clients, government businesses, tenders, and key retail and bank assurance partnerships, which is being capitalised by its competitors.
The company believes that fresh fund infusion will increase the regulatory comfort of the insurance regulator, and reflect continued support by the promoter company.
The company also highlighted the problem of high attrition levels in the current year, impacting client relationships and channel development. The company needs further investment to build up the retail health distribution network, strong digital ecosystem, tech alliances, and enter into tie-ups with OEMs to capture the fast-growing EV (electric vehicle) segment.
RGIC reported a total income of Rs 1,917 crore and a net earned premium of Rs 1,599 crore in the third quarter of the ongoing financial year.
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First Published: Thu, February 23 2023. 19:39 IST
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