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IRDA seeks status report from Tata, AIG

Source: PTI
September 16, 2008 19:31 IST
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Insurance regulator IRDA has asked insurance firm Tata AIG, floated by Tata Group and American Insurance Group, for a report on its operations in India following reports that AIG was in deep financial trouble.

"Having regard to the developments reported in USA, the IRDA has asked for the reports of the companies in the matter," the regulator said in a statement.

AIG holds 26 per cent and Tatas 74 per cent in the JV business that offers both life as well as general insurance.

The statement said that the recent developments in the New York financial markets have caused concern in the financial markets in India. Certain newspapers have reported that AIG, which is a leading insurance group of the USA, has sought financial support from the Fed Reserve and have voiced concerns about the impact the developments in AIG would have on the general and life insurance companies in India, it said.

IRDA also noted that the accounts of these two companies as on March 31, 2008 indicate that both companies have satisfactory solvency margins which are adequate to meet their liabilities.

Both the companies are registered under the Indian Companies Act and are bound by the provisions of the Insurance Act and other Regulations, it said.

AIG Group, operating in the country for more than five year, has 12,000 employees.

Besides insurance business, AIG has presence in asset management through a wholly-owned subsidiary. It is also present in consumer finance and private equity.

AIG is reeling under a financial crisis and has sought $40 billion in bridge loan from Fed to stave off the crisis.

AIG's ills came to fore when credit rating agencies -- Standard and Poor's Moody's and Fitch -- lowered the company's credit scores.

The downgrades, financial analysts said, would make things difficult for AIG and the New York Times reported it would force the company to turn over billions of dollars in collateral to its derivatives' trading partners.

In the face of uncertainty, shares of AIG plummeted more than 60 per cent on Monday.

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