Nine newly set up foreign reinsurance branches(FRBs) in their first full year of operations have mobilsed Rs 6216 crore of premium in 2017-18.
Out of which, Swiss Re, the second largest global reinsurer has the largest share of Rs 2047 crore while Munich based Munich Re and Paris based SCOR SE has reported Rs 1307 crore and Rs 1186 crore of premium respectively. During the year 2017-18, foreign reinsurance branches infused assigned capital of Rs 1452.54 crore, said IRDAI..
Out of all 9 foreign reinsurance branches in India, 3 have already reported profit after tax while remaining 6 has reported loss in 2017-18.
Swiss Re has reported a profit after tax of Rs 60.96 crores while Axa France and Lloyd’s has reported a profit after tax of Rs 7.67 and Rs 1.69 crore respectively.
Overall, total losses of all 9 foreign reinsurance branches was Rs 323.03 crores.
The total assigned capital of foreign reinsurance branches increased to Rs2570.35 crore as on 31st March 2018 from Rs 1117.81 crore as on 31st March 2017.
At present there are almost 10 global players including Munich Re, Swiss Re, Hannover Re, SCOR,Lloyd's, RGA, Warren Buffet owned Gen Re, AXA,XL Catlin,who have set up their branch operations in the country.
AGCS enters and Amlin exits India market
The latest player to enter the Indian reinsurance market is Allianz which has got a licence through its arm, Allianz Global Corporate & Specialty(AGCS). The company is expected to begin its operations sometime this month and wll bring in its international services and expertise to global clients in India.
.CB Murli, a former senior official of HDFC Chubb General insurance,has been appointed as the CEO of the company.
Also US major FM Re(Factory Mutual Reinsurance) has applied for a license to set up its operations in the country. FM Re is a highly specialised reinsurer and only focuses on a few clients and segments for business.
Meanwhile MS Amlin, the first Lloyd's syndicate that had set up its operation at Lloyd;s India platform in India, has exited it.
Sources explain that the company's exit from Indian market is a part of a restructuring of its global operations focusing on cost and synergy.
The slow pace of growth and higher cost of procuring Indian business had made the company to rethink its India strategies drastically in the first year of its operations itself.
However, the company will continue to do India business through its Singapore and London desks.
Now,just one Syndicate , Markel, is doing business in India's Lloyd's India platform.
The fate of ITI Reinsurance, the first private sector reinsurer, set up by Sudhir Valia and whose takeover by Prem Watsa's Digit was turned by the IRDA, is not known.
The company completed two years without doing any business on Dec 31, 2018.
According to the IRDA annual report, the company had shown a profit of over Rs 17 crore at the end of FY2017-18.
Santhana Gopalan, CEO of SCOR SE Indian Branch, has called it a day after working with the French reinsurer for a long time.and Mukul Kishore, the chief underwriting officer of the company in its Indian branch , has been elevated as the new CEO in the country,
Earlier Kalpana Sampath, CEO of Swiss Re's Indian branch had quit and Satish Raju, an insider had taken over as the new of the company.
Creating reinsurance hub in India
The extant reinsurance regulatory framework favour the creation of a reinsurance hub in India, said the insurnace regulator IRDAI..
The IRDAI , in view of the recent developments in the reinsurance scenario in the country, has carried out a comprehensive review of the extant reinsurance framework in concurrence with the dynamic needs of the industry. The new architecture will strive to act as a catalyst in India’s journey to establish as a global reinsurance hub, in near future.
Multitude of factors favour India having a regional reinsurance hub. Geographically, India is located in the heartland of South Asia and has conducive relationships with the Chinese and Middle Eastern markets. Economically, India is forging ahead as an emerging economy with enviable growth rate. Environmentally, the frequency and severity of natural catastrophes call for proactive and innovative reinsurance mechanisms to mitigate the impact of disasters.
Finally, insurance inclusion and increase in awareness will help in growth of direct business, which will enhance the reinsurance need and help India becoming a regional reinsurance hub. The development of IFSC GIFT City in Gujarat is also a step forward towards the creation of a reinsurance hub. Many insurance and reinsurance firms have shown interest to set up their operations in the GIFT City which demonstrate the potential of GIFT City to compete and match with the global financial centres in Singapore, London, Tokyo and other countries.
Numerous regulatory changes in the recent past have paved the way for the entry of new entities like Lloyd’s India and Foreign Reinsurers’ Branches (namely Swiss Re, Munich Re, SCOR SE, RGA, Hannover Re, XL Catlin, Gen Re etc). These branches are required to maintaina minimum retention of 50% of Indian business. ITI Re, which has been granted license to carry out reinsurance business in the country, is the second Indian Reinsurer.
The Indian reinsurance sector now has a good number of players to promote a healthy and competitive market for reinsurance. In addition to these domestically regulated entities, there are several Cross Border Reinsurers (more than 360 in number, including Lloyd’s Syndicates) participating in the Indian reinsurance market. With the increase in the number of international reinsurers opening their branches in India, it is expected that the capacity will increase which will result in to the establishment of a reinsurance hub in India in near future.