Mumbai: Insurance companies can now invest up to 25 per cent in their group companies - that is what is being proposed in the investment guidelines to be notified by the Insurance Regulator IRDA, next week.
Earlier, insurance companies were allowed to invest only 10 per cent in their group companies.
Not only that, unit linked insurance products - popularly known as Ulips will come under investment regulation for the first time.
But insurance companies say that not much will change for them.
ICICI Prudential Life Insurance CIO Puneet Nanda says, “What this new guideline is doing is its formalizing risk management framework. We on our own have always had a risk management framework, which was actually pretty conservative. Perhaps more conservative than what is being mandated. We don't see any significant change because of this.”
They have also shrugged off the change in investment limits from 10 per cent to 25 per cent.
That's because sources in the insurance companies say that many companies don't even fulfill the 10 per cent limit and it varies with the fund managers’ strategy.
But these guidelines will ensure diversification and bring more flexibility for fund managers to invest in their group companies.
However, the guidelines have also set a limit of 25 per cent exposure to a particular sector.
For mutual funds companies there is no limit set for investment in corporate group or sector exposure.
Hence the experts say that insurance fund managers may have comparatively stricter guidelines to deal with.
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