He also asked insurance companies to write off their exposure to the bankrupt DHFL as they did in case of IL&FS.
DHFL, admitted for bankruptcy proceedings on December 3, has two insurance joint ventures — DHFL Pramerica Life Insurance and DHFL General Insurance.
DHFL Pramerica Life, launched in 2008, is a joint venture between DHFL Investments, a wholly-owned arm of DHFL, and Prudential International Insurance Holdings of the US, has Rs 4,675 crore assets under management and employs 3,100.
DHFL General Insurance, on the other hand, is a fully-owned subsidiary of Wadhawan Global Capital, the holding company of the HDFL Group, and manages USD 18.6 billion assets through its lending, investment and insurance platforms.
“Right now, their solvency ratios are up to mark and so there is no issue,” Khuntia told reporters on the sidelines of an Assocham event.
As of September, DHFL Pramerica Life’s solvency ratio stood at 388 percent and that of DHFL General Insurance at 230 percent, according to the public disclosures made by them.
The regulator-mandated solvency ratio is 150 percent.
“Even if the parent company goes for liquidation, it will be sold and somebody else will take over. So, DHFL’s share in these insurance companies will be transferred to the new owners,” he said and assured that no policyholders will be affected during the process.
However, Khuntia asked insurers to write off their exposures to the housing finance company in the similar manner as they followed in the case of the now bankrupt IL&FS.
“There is a procedure for how the exposures to DHFL is to be written off and when…they will have to follow that,” he said without explaining how much is the exposure of insurance players to DHFL.
He also said insurers which have exposure to DHFL’s NCDs will also benefit from the bankruptcy resolution. “When the NCLT resolves this case, insurers being part of the ICA, will get whatever their share from the sale proceeds.”
It can be noted that Irdai had allowed insurers to sign inter creditor agreement, which the RBI mandated in the revised NPA resolution framework issued on June 7.