Stories
Why Indian Insurers Are Pulling Back From Equities Amid Market Slump
M
Moneycontrol•16-10-2026, 12:38
Why Indian Insurers Are Pulling Back From Equities Amid Market Slump
- •Indian insurers dramatically slowed their equity investments, injecting Rs 8,013 crore in the September quarter compared to Rs 18,087 crore in the June quarter.
- •Falling equity prices over an eight-week period reduced the value of existing holdings, putting pressure on solvency ratios governed by IRDAI regulations.
- •Rising bond yields on government securities provided insurers a safer alternative to lock in higher returns while stocks were sliding.
- •Insurers are leveraging debt instruments and considering non-convertible debentures to defend their capital base and keep solvency ratios above the 150 percent minimum.
- •Mutual funds and other domestic institutional buyers also saw reduced equity inflows during the September quarter, reflecting a broader market caution.
Key Questions Answered
Insurers have slowed equity buying due to falling market prices that reduced asset values and hit solvency calculations, along with rising bond yields that allowed them to lock in higher returns on safer debt assets instead of taking on stock risks.
The 2024 IRDAI regulations fix the control level at 150 percent of the required solvency margin, and insurers must stay at or above this threshold at all times.
Combined flows from insurers and NPS funds fell by 45 percent to Rs 22,714 crore in the September quarter, marking the steepest quarterly drop in five quarters.
