According to Reliance General Insurance, the capital infusion from the company's current shareholders will send a clear message to the market that it is supported and will enable it to beat the market growth rate.
Digital Desk: Reliance General Insurance Company (RGICL), a subsidiary of Reliance Capital, has requested an urgent Rs 600 crore capital infusion from Reliance Capital, adding another twist to the insolvency resolution process.
Y Nageshwar Rao, the administrator of Reliance Capital, has received a letter from Reliance General Insurance requesting Rs 600 crore in capital assistance by December 31, 2022, according to sources who spoke to TNIE.
According to the general insurance firm, the money infusion is necessary to keep the company operating, increase its worth, and raise its solvency from 155 to roughly 175 percent.
The company claims in the letter that the borderline solvency ratio—the minimum required by an insurance company is 15% of the total insurance coverage offered—has become a barrier to the company's ability to develop its clientele, particularly large corporations and the government.
According to Reliance General Insurance, the capital infusion from the company's current shareholders will send a clear message to the market that it is supported and will enable it to beat the market growth rate.
Additionally, it will boost wealth generation and eliminate the chance of underperforming the larger markets.
Sources claim that during its meeting on December 9, 2022, the Committee of Creditors (COC) will review and examine Reliance General Insurance's request for a capital infusion.
The company has informed the Reliance Capital administrator that it can benefit considerably from the current environment as a large format insurer if it can pursue growth like most of its peer competitors, but it would require sufficient capital assistance from Reliance Capital.
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