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CS Professional · IFSCA - Regulations, Listing and Compliances · Insurance and Reinsurance

A reinsurer operating from GIFT IFSC has admissible assets of Rs 840 crore and liabilities of Rs 690 crore. Its required solvency margin is Rs 120 crore, and the supervisory minimum ratio is taken as 150%. How much additional available margin must it add to reach exactly 150%?

Available solvency margin is admissible assets less liabilities, which is 150 crore. To hold 150% of the 120 crore requirement it needs 180 crore. The additional margin required is therefore 30 crore. Quoting 180 crore would ignore the margin already held.

  1. ARs 120 crore
  2. BRs 30 croreCorrect
  3. CRs 180 crore
  4. DRs 45 crore

Explanation

Available margin = 840 - 690 = 150. Target = 1.5 x 120 = 180. Shortfall = 180 - 150 = 30. Rs 180 crore ignores the existing margin, and Rs 45 crore wrongly applies 150% to the shortfall.

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