Asset Management - IC-99 Exam Study Notes

IRDA has tightened equity investment norms by prescribing a dividend track record of 10 per cent for the last two years instead of the earlier 4 per cent in the last eight out of the nine years. IRDA has also directed that insurance companies can invest in equity shares of any listed company where at least 10 per cent dividend has been paid for at least two consecutive years under the approved investment category.
As per IRDA directives in unit-linked insurance plans, which are a mix of investment and protection, insurance companies can invest 75% in approved securities and 25% in other than approved securities. Approved securities are those stocks that have dividend paying record and are liquid.
IRDA has also prescribed that as per the liquidity criteria, in a month 50,000 shares, or a value of Rs 5 lakh crore, should be traded. Traditional funds invest primarily in government securities -50 per cent -both state and central, 15 per cent in infrastructure, and the remaining 35 per cent in corporate bonds, equities and other than approved securities.
The regulator wants insurance companies to stay away from investment in companies which have not paid dividend and are financially weak.
General Government Securities and Approved Investments are two major avenues of investments by life insurers.

Important Points for IC 99 - Asset Management Exam