Subordinated debt issuances, or hybrid bonds, have emerged as a major source of growth capital – and higher solvency ratio1 cushion – for non-life insurers. As many as seven of them raised Rs 2,181 crore in fiscal 2017, and more issuances are on the cards with non-life premium growth expected to be buoyant this fiscal.
Subordinated debt issuances,
or hybrid bonds, have emerged
as a major source of growth
In December 2015, the Insurance Regulatory and Development Authority of India (IRDA) allowed insurers to raise non-equity forms of capital such as subordinated debt or preference shares, which qualify as regulatory capital, and help improve the solvency ratio of insurers.