HDFC Life Mulls Preferential Allotment Of Equity Shares

HDFC Life Insurance Co. is considering issuing equity shares or other securities via preferential allotment.

The insurer’s board is set to meet on Sept. 3 to consider the proposal, according to a filing released on the bourses late on Tuesday.

BloombergQuint’s emailed queries to HDFC Life seeking further details on the preferential allotment didn’t elicit any response.

According to Jignesh Shial, research analyst at Emkay Global, the “raising of additional capital on a preferential basis could be on account of a spike in claims witnessed by the company impacting its solvency ratio and an attempt to balance or maintain it.”

To be sure, HDFC Life’s solvency ratio was at 203% in the last two quarters, above the mandated 150%.

Vibha Padalkar, managing director and chief executive officer at HDFC Life, in an interview with BloombergQuint after the June-quarter results, said the life insurer has set aside an additional Covid reserve of Rs 700 crore, most of which will be used towards deaths that had taken place but not intimated. The insurer expected to start receiving claim intimations in August.

Shares of HDFC Life were trading 0.12% down as of 2:18 p.m. on Wednesday compared with a 0.06% fall in the Nifty 50.