The insurnace regulator IRDAI has finally cancelled the license of the sole Indian private sector resurer ITI Reinsurance Limited, set up by Sudhir Valia,one of the promoters Sun Pharma, for failing to do to any business.
Though the company had received its license on 30th December, 2016, it had not been able to do any business in the first two years of its existence.
Meanwhile, Canadian based Indian born billionaier Prem Watsa, through his Indian general insurnace comoany Digit Insurance, had tried to take over the company but was not allowed by the IRDAI do it as the company hadn't done any business and any takeover of the comoany would have been treated as a trading of license which is not allower under regulations. .
ITI Re did not commence business operations within one year of date of issue of the license a request by the comoany for grant of extension of time up to 29th December, 2018 for commencing the business operations was allowed by the IRDAI
However, ITI Re failed to commence its business operations before the extended date of 29th December, 2018 despite having invested a capital of over Rs 700 crore and sources attributed it to the faulty business plans.
Earlier, the IRDA, on tecgnical reasons, had refused to allcoate any portions of the obligatory business to the comoany which an Indian reinsurnace company is eligible for.Currently state owned GIC Re does the entire 5 per cent obligatory business. .
Subsequently ITI Re on 11th February, 2019 communicated to the IRDAI , their board had resolved to surrender the licenses as they did not intend to carry on any insurance business activity. ITI Re has surrendered the license to the IRDAI and confirmed to the IRDAI that, they have not underwritten any business or issued any policy.
After cancelling the license of the company, the IRDAI has asked the company to remove the word “Reinsurance” from its name and shall change the object clause of its Memorandum of Association (MoA), in the records of Registrar of Companies (RoC) / Ministry of Corporate Affairs (MCA), and shall submit supporting documents to the IRDAI. .