Non-life insurers, that relied heavily on equities to raise capital earlier, have found a new alternative in “subordinated debts or hybrid bonds”. As many as seven of the 31 non-life insurance companies have raised Rs 2,181 crore in financial year 2017 through hybrid bonds, according to rating agency CRISIL.
These hybrid bonds have come as a great relief to the non-life insurers as it is providing them with a higher solvency ratio cushion.
Insurance Regulatory and Development Authority of India (Irdai), in 2015, allowed insurance companies to raise capital in non-equity form, thereby providing a higher solvency cushion.
