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Started by : Niranjan Meena, Actuary Manager, LIC   07 02 2009 06:26:23 +0000
Industry : InsuranceFunctional Area : India(Markets)
Activity:  85 views;  last activity : 07 06 2010 20:18:09 +0000

Dear friends, IRDA has prohibited Indian insurers from investing in Indian Depository Receipts (IDRs), saying the insurance law does not allow investment of policy-holders’ funds directly or indirectly outside the country.

They say that the investment in an IDR by insurance firms would amount to indirect investment made outside the country which will not be in compliance with the existing provisions of the insurance legislation that debars insurers from investing policy holders’ funds overseas

I would like to know what you people think, how this will affect insurance companies?

 
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1 It may ruin IDR market of Stock analysis

It may ruin IDR market of Stock analysis

idea posted by Niranjan Meena Actuary Manager, LIC

Section 27C of the Insurance Act bars investment of insurance funds outside India. This move would not affect insurers much, but the decision would diminish the attractiveness of the IDR market of stock analysts.

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by Niranjan Meena, Actuary Manager, LIC  | 07 03 2009 14:25:43 +0000

Very true Mr. Sharad, i think all the insurance companies should unite against this section

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IDR allow foreign companies to raise funds from Indian markets. They are monitored by sebi. Mutual funds were allowed to invest in IDR only recently .FII and NRI need the permission of RBI for investing in IDR. With IDR yet to click and insurance companies being top institutional investors, I think this will have a strong impact on IDR market.

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Even in Japan they don't allow their Insurance companies to invest in foreign equities. They surmount this difficulty by entering into swap agreements with foreign investment banks. Once the swap is truncated it turnout as the Japnese insurers make similar returns as if they have invested in stocks. Americans swap this yen with Canadians and hedge their risk with UK Stock investors who are berish on Japanese yen. Ultimately everybody makes returns and Japanese get their work done in investing in foreign stock indirectly. 

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