Insurance Regulator Eases AIF Investment Norms

The insurance regulator allowed Indian insurers to invest in fund of funds, which in turn invest within the country, in a move that opens up another mode of investment for such companies.

The insurers, however, are restrained from investing in fund of funds that invest in overseas companies or funds, the Insurance Regulatory and Development Authority of India said in a circular, as it modified the guidelines for alternate investment funds. The regulator has also barred insurance companies from investing in an AIF having exposure into a fund of fund in which the insurer has taken an exposure.

The IRDAI has replaced the existing guideline that read “no investment is permitted in AIFs, which are of fund of funds and leverage funds”. The amended circular now states “no investment is permitted into AIFs which undertake leverage or borrowing other than to meet day-to-day operational requirements and as permitted under SEBI (Alternative Investment Funds) Regulations, 2012”.

The regulator also made it mandatory for an insurer to obtain a certificate issued by a concurrent auditor every quarter, stating compliance of all the conditions, and that it be filed along with quarterly periodical returns.

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