In a bid to draw more foreign capital into the reinsurance market, insurance regulator IRDAI will allow repatriation of capital by foreign reinsurers with prior approval and subject to meeting certain conditions.

The IRDAI said that it has received recommendations from the committees on reinsurance regulations, ease of doing business and developmental topics and the committee on finance and tax recommendations on matters pertaining to the repatriation of excess assigned capital by foreign reinsurance branches and Lloyd’s India.

“After careful examination of the recommendations of the working groups, it is noted that to ensure sufficient reinsurance capacity in India and to attract more reinsurance players for offering reinsurance at a competitive price, the free movement of assigned capital for foreign reinsurance branches is required,” the regulator said in a circular on Wednesday.

The IRDAI, however, has set certain conditions for foreign reinsurers. In order to repatriate capital, a certificate is necessary from the foreign reinsurance company stating that it has net owned funds of Rs 5,000 crores, minimum assigned capital of Rs 100 crore and post repatriation solvency ratio should be at least 50 basis points higher than the control level of 200 per cent as specified by the IRDAI.

The withdrawal, for which one request can be made by the foreign reinsurer in a financial year, shall also not exceed 20 per cent of the assigned capital of such reinsurers as at the end of the previous financial year. The repatriation request also has to be made through a branch established in India. Earlier this month, the regulator issued a set of guidelines for foreign insurers opening liaison offices in India where the minimum eligibility norms were set including a profit-making track record for three financial years in the home country and a net worth of not less than $65 million.

The government has also eased the permissible FDI limits in insurance companies to 74 per cent from earlier 49 per cent. Since then, Belgium-based Ageas acquired a 25 per cent stake from IDBI Bank to expand its overall stake to the maximum permissible 74 per cent in Ageas Federal Life Insurance.

Health panel

The IRDAI has set up a 15-member Health Insurance Consultative Committee to identify issues and challenges in the entire value chain and make recommendations to overcome them.