United India raises Rs 900 crore via NCDs

MUMBAI: Chennai-based United India Insurance has raised Rs 900 crore through subordinated debt to boost solvency capital, which is below the mandated regulatory capital requirement.

The insurer has raised funds at 8.25 per cent for a 10-year period with a call option after five years, which will help the insurance company shore up solvency ratio to 1.40, against the necessary 1.5.

“We have raised alternate capital in the form of non-convertible debenture at 8.25 per cent, with a call option after 5 years with a tenor of 10 years,” said MN Sarma, the managing director of United India Insurance. “This will help in improving the solvency. This, along with quota share treaty, underwriting discipline, we are likely to touch 1.7 times.”


Last year, National Insurance Company had raised debt to improve its solvency margin to 1.9 from 1.26. Union India Insurance has reported a loss of Rs 914 crore in 2016-17 due to reverses in group health and third party motor policies.

In this year’s Budget, the government has announced the merger of three state-owned insurers — United India Insurance, National Insurance and Oriental Insurance — and subsequently listing of the merged insurer.

Sharma said it will be a positive move for the companies as it will improve their operational efficiency, reduce competition and increase solvency.