Indian insurers can now invest in REITs, infrastructure trusts

This will boost the overall portfolio yield held by these firms.

The Insurance Regulatory and Development Authority of India (IRDAI) has allowed insurers to invest in debt securities issued by infrastructure investment trusts (InvITs) and real estate investment trusts (REITs), according to media reports.

This is expected to boost the overall portfolio yield held by these firms whilst pushing more funding to the real estate sector.

The approval was given after the regulator permitted insurers to invest in such pooled investment vehicles back in March.

However, insurers cannot invest in debt instruments of InvITs and REITs that are rated below AA as a part of the approved investments. Instruments rated or downgraded below AA should form part of “other investments”.

Three-fourths (75%) of investments must be in AAA-rated assets whilst 25% can be invested in AA- or A-rated assets. An insurer can take exposure to below AA-rated instruments only after getting approval from the board.