Key Takeaways
- • Indian insurers have nearly doubled their exposure to private credit funds over the past two years, according to TradingView's report, as they seek diversification and better returns for policyholders.
- • Bajaj Life and Bajaj General Insurance raised their commitments to alternative investment funds (AIFs) to 650 crore from 200 crore over the past two years, with most of the incremental allocation going to private credit rather than equity strategies.
- • Insurers can currently invest up to 3% of shareholders' funds in specified AIFs, and the industry is lobbying to raise the cap to 5%.
- • IRDAI has widened insurers' investment options and clarified that single-AIF exposure limits will aggregate direct and fund-of-funds exposure, while restricting overseas deployment of policyholder-sourced capital.
Summary
Insurance companies in India have nearly doubled their exposure to private credit funds over the past two years, seeking to diversify portfolios and improve returns for policyholders, according to a report by Shilpy Sinha published via TradingView. Bajaj Life and Bajaj General Insurance, for example, increased their commitments to alternative investment funds from 650 crore, up from 200 crore over the same period, with most of the additional allocation directed toward private credit rather than equity strategies.
Amit Joshi, chief investment officer of Bajaj General Insurance, said insurers are increasingly looking at AIFs as a diversification avenue. He noted that credit AIFs can offer relatively predictable returns and regular income distributions, particularly for general insurers, while allocations remain guided by each insurer's investment objectives, risk appetite and regulatory requirements. Another CIO at a large life insurer said the company had doubled its AIF exposure without disclosing details. The insurers have backed funds managed by Acertis, ICICI Prudential AIF and other private credit platforms, and SBI Life Insurance has also stepped up its investments in the segment.
Under the current framework, insurers can invest up to 3% of shareholders' funds in specified AIFs. The industry is seeking to raise this limit to 5%, arguing that greater flexibility would help diversify holdings and enhance portfolio returns. Kanchan Jain, head of the Ascertis Credit Group, said institutional investors are seeking income-generating assets beyond traditional fixed income, and that the group's fourth private credit fund has crossed $700 million in commitments with a $1 billion target. Jain said performing private credit gives insurers exposure to a diversified borrower pool with regular distributions and financing structures tailored to individual businesses. Interest is coming from both life and general insurers.
Earlier this year, the Insurance Regulatory and Development Authority of India (IRDAI) widened insurers' investment options, including permitting investments in equity and debt of private limited companies and easing norms for infrastructure financing through special purpose vehicles. Under the revised framework, life insurers can invest up to 3% of their life or segregated funds, and general insurers up to 5% of investment assets, in private limited companies, AIFs and venture funds combined. IRDAI has clarified that single-AIF exposure limits will aggregate direct investments and indirect exposure via fund-of-funds structures, and it is restricting overseas deployment of policyholder-sourced capital.
Amit Joshi, chief investment officer of Bajaj General Insurance, said insurers are increasingly looking at AIFs as a diversification avenue. He noted that credit AIFs can offer relatively predictable returns and regular income distributions, particularly for general insurers, while allocations remain guided by each insurer's investment objectives, risk appetite and regulatory requirements. Another CIO at a large life insurer said the company had doubled its AIF exposure without disclosing details. The insurers have backed funds managed by Acertis, ICICI Prudential AIF and other private credit platforms, and SBI Life Insurance has also stepped up its investments in the segment.
Under the current framework, insurers can invest up to 3% of shareholders' funds in specified AIFs. The industry is seeking to raise this limit to 5%, arguing that greater flexibility would help diversify holdings and enhance portfolio returns. Kanchan Jain, head of the Ascertis Credit Group, said institutional investors are seeking income-generating assets beyond traditional fixed income, and that the group's fourth private credit fund has crossed $700 million in commitments with a $1 billion target. Jain said performing private credit gives insurers exposure to a diversified borrower pool with regular distributions and financing structures tailored to individual businesses. Interest is coming from both life and general insurers.
Earlier this year, the Insurance Regulatory and Development Authority of India (IRDAI) widened insurers' investment options, including permitting investments in equity and debt of private limited companies and easing norms for infrastructure financing through special purpose vehicles. Under the revised framework, life insurers can invest up to 3% of their life or segregated funds, and general insurers up to 5% of investment assets, in private limited companies, AIFs and venture funds combined. IRDAI has clarified that single-AIF exposure limits will aggregate direct investments and indirect exposure via fund-of-funds structures, and it is restricting overseas deployment of policyholder-sourced capital.
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