The Insurance Regulatory and Development Authority of India (IRDAI) on October 26, 2022, issued a circular regarding the repatriation of Assigned Capital by FRBs/Lloyd’s India to provide ease of doing business so that insurance penetration can be increased.
It is stated that the Committees on Reinsurance Regulations, Ease of Doing Business and Developmental topics and the Committee on Finance and Tax Recommendations for Reinsurance Industry gave their recommendations and 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.
In view of the above, it has been decided that the FRBs and Lloyd’s India are permitted to repatriate excess assigned capital with prior approval of the Authority subject to the following:
• The request to repatriate the assigned capital will be submitted by the Foreign Reinsurer, who is engaged in the reinsurance business through a branch established in India, justifying the reasons for the such request
• A certificate from the Foreign Reinsurer stating that the Reinsurer has Net Owned Funds of Rs. 5000 Crores or such amount as prescribed under Sec 6 (2) of the Insurance Act, 1938, as per the last audited balance sheet
• Minimum Assigned Capital of Rs. 100 Crore or such higher sum as specified by the Authority at the time of grant of certificate of registration net of provisions as per regulations will always be ensured
• Solvency ratio after the repatriation is at least 50 bps higher than the control level of solvency i.e. 200% as specified by the Authority
• Such withdrawal shall not exceed 20% of the assigned capital of such FRB/Lloyd’s India as at the end of the last financial year
• One request in a financial year can be made by the Foreign Reinsurer
• A certificate from certifying Actuary to the effect that sufficient reserves are made to meet the reinsurance liabilities
• A certificate from a practicing Chartered Accountant/Cost Accountant that the request does not include the repatriation of surplus
• A certificate from a practicing Chartered Accountant/Company Secretary on compliance with the FEMA requirements, RBI circulars, tax laws, and applicable regulatory framework.
This circular will come into force with immediate effect.
[Circular No. IRDAI/REIN/CIR/MISC/224/10/2022]
