The fast growing Indian reinsurance sector seems to be the flavor of the season for the global insurers and investors.
The latest entrants that have thrown their hats in the ring are, Prem Watsa, and Allianz Group, who have applied for the licenses to undertake reinsurance business, to the insurance regulator IRDAI.
The Indian reinsurnace market that currently generates premiums of around Rs 30,000 crore, is expected to touch Rs 70,000 crore by 2022. Apart from the state owned GIC Re,there are another 10 players, including nine foreign players and Indian reinsurer ITI Re, that have already set up operations in the country since 2017. .
Allianz Global Corporate & Specialty, a 100 per cent subsidiary of Allianz Group, has already received the initial approvals from the IRDAI known as R1 while Watsa’s newly set up reinsurance entity –Valueattics Re- has just applied for a R1 license.
IRDAI sources have confirmed to the Asia Insurance Post about this development.
For both Watsa and Allianz, the reinsurance foray will be a matter of further expansion of their existing re/insurance business in the country.
Watsa, a Candian Indian born entrepreneur has already investments in two domestic general insurance companies, over nine per cent in the ICICI Lombard General Insurance and 49 per cent in a recently set up general insurance company –Digit. Watsa has also substantial investment in the international re/insurance markets.Kamesh Goyal, a formersenior official of Allianz who is also partner of Watsa in Digit, is also his partner for setting up the reinsurance operations in India. .
Similarly, Germany major Allianz, with 26 per cent, has already one life joint venture(JV)- Bajaj Allianz Life Insurnace-and non life JV-Bajaj Allianz General Insurance- along with the partnership of Bajaj Group.Besides. with 50 per cent stake, the group recently has entered into a partnership with construction giant Shapoorji Pallonji Group to set up a $500-million real estate fund — SPREF II — which will invest in commercial office properties in India.
Almost all the global reinsurers like Munich Re, Swiss Re, Hannover Re, SCOR, Lloyd’s of London( with two of its Syndicates MS Amlin and Markel)-, Gen Re, Axa Re , XL Catlyn and RGA have already set up their Indian branches at the fag end of the FY 2016-17.
These reinsurers hadn’t done much business last year and had continued to do business offshore.However, they are expected to grow their top line more aggressively in 2018-19.
Among the sectors, the agriculture insurance particularly Prime Minister Fasal Bima Yojana(PMFBY), that had collected Rs 22,000 crore of premiums in 2016-17 is emerging point of major attraction for these global reinsurers.
Alice Vaidyan, CMD, GIC Re, earlier had said “We have provided 50 per cent reinsurance coverage for the PMFBY last year. The local reinsurers hadn’t shown much interest last year. This year, however, we have seen interest from other reinsurers who are branch operations in India to provide covers in the segment.’’
According Vaidyan, GIC Re has almost 60 per cent of share in the Indian reinsurance market and any higher degree of competition from the new entrants in the Indian market in future wouldn’t matter much as the state owned reinsurer has been competing with these players who have been doing Indian business offshore.
Earlier, Inga Beale, CEO, Lloyd of London, had said they were looking for a USD 10 million of premium in next one year from their Indian branch which became operational since April 1, 2017.,
Lloyd’s had mobilised a premium income to the tune of USD 240 million from its Indian operations during 2017, showing an increase of 11 per cent over 2016.
But. it couldn’t make any significant earning from its Indian branch operations as Inga Beale, CEO, Lloyd’s explained that by the time the reinsurer kickstarted its branch in India, most of the renewals in the domestic insurance sector had already been completed.