IRDA asks Tata AIG to clarify status as AIG stumbles

16 September 2008

Mumbai: The Insurance Regulatory and Development Authority (IRDA), India's insurance regulator has asked the two insurance joint ventures companies between the Tata Group and American International Group (AIG) to submit reports on their operational status.

The request for more information on operational status was made by the chairman of the IRDA, J Hari Narayan, asking the companies for ''business status reports''. He said that the companies were expected to respond ''quickly''.

The demand comes after the global insurer, AIG, was reported to be close to bankruptcy, following investment bank Lehman Brothers who filed for Chapter 11 bankruptcy yesterday (See: Lehman Brothers heads for Chapter 11 as Barclays walks away).

AIG stock prices crashed 61 per cent, and the company was desperately seeking funding to stay afloat. Facing a severe cash crunch, the insurer is looking to raise $14.5 billion to cover obligations, and reports indicate that it has around only a day to do so, before it will be left with no option but a bankruptcy-court filing.

AIG has joint ventures with India's Tata Group for both life and general insurance businesses. Both are run as independent joint venture companies, in the name of Tata AIG Life Insurance Co. Ltd. and Tata AIG General Insurance Co. Ltd. The boards of both companies are likely to meet during the day to discuss responses to the query by IRDA, according to reports citing unnamed sources in the company.

In a statement to DowJones Newswires, IRDA chief Narayan said that the current solvency ratios of both joint venture companies looked ''comfortable'', and that the regulator was not concerned over capital.