Max New York Life meets solvency norms: IRDA

Our Banking Bureau
21 July 2005

Chennai: It is just not the Life Insurance Corporation of India (LIC) that is finding it difficult to meet the stipulated solvency norms. For a brief period the life insurance giant had company in the form of Max New York Life Insurance Company Limited.

According to the 2003-04 annual report of the Insurance Regulatory and Development Authority (IRDA), published sometime back, Max New York Life failed to meet the stipulated 150 per cent solvency norms by a small margin.

Says IRDA chairman C S Rao, "The company had revised its solvency margin calculations subsequently and these have been reviewed by us and have been found satisfactory."

According to him, Max New York Life satisfied IRDA's solvency norm stipulations at the end of 2003-04.

In response to the questions sent to Max New York Life's chairman and vice chairman, the company's public relations agency says the solvency margin at the end of FY 2004 was 152 per cent. The Rs466-crore equity-based company had a solvency margin of over 200 per cent as on June 2005.

According to Rao, when a company does not meet the stipulated margin levels, it is required to take steps to comply with the regulatory stipulation. "Compliance of the requirement is ensured through infusion of fresh equity. In case of the insurer being unable to do so immediately, a time frame is prescribed to ensure compliance."