General Insurance Corporation of India (GIC Re), the country's largest reinsurance firm is not worried with several foreign competitors setting up branches in India since there is enough room to grow in a market which is still largely underpenetrated. GIC hopes to maintain a dominant share even in the future, while it also takes steps to expand its operations in more overseas markets, Alice Vaidyan, Chairman and MD of GIC said on Oct 4.
“From the foreign reinsurers, we don't see any threat or competition. They were already working in the Indian market from outside of India. Now, they have only opened branches. There is room for everyone to grow in the market. We will continue with our dominant market share of 60 per cent,” Vaidyan told THE WEEK.
Earlier this year, Swiss Re, Munich Re, SCOR Re, Hannover Re and RGA Life Reinsurance received certificates of registration from Insurance Regulatory and Development Authority of India (IRDAI), allowing them to open branches and operate from India. Until then, GIC Re was the only reinsurer in India, although some of the foreign companies were doing business in India, through their overseas offices.
Lloyd's the specialist insurance and reinsurance market also commenced its operations in India, in April this year.
Vaidyan pointed that in India only 10 per cent of the economic losses during catastrophic events were insured, compared with a global average of 30 per cent.
GIC Re wrote gross premiums worth Rs 33,741 crore in the year-ended March 2017. Crop insurance, fire insurance and motor insurance accounted for a major share for GIC Re in India. Of the total gross premiums 70 per cent was contributed from India, while the rest was from overseas business.
The company, which is the 12th largest reinsurer in the world, has offices in five countries and has chalked out ambitious expansion plans. In the domestic market, it will look to grow business in the life reinsurance segment; non-life reinsurance still accounts for 95 per cent of total reinsurance premiums in India. It also plans to expand operations to more overseas markets.
“As a reinsurer, I need to diversify across geographies. The current share of foreign business is only 30 per cent. We will grow more in foreign...we have plans to set up a syndicate at Lloyds of London; its in the process, likely to happen next fiscal year. Once, we have Lloyds platform, we can diversify in many countries,” said Vaidyan.
GIC Re also wants to accept more US insurance related risks and expand its relationships with insurers in the US, which is the largest market globally. It also aims to establish representative office in China and also setting up a representative office in Brazil to expand Latin American business. It also aims to open a representative office in Bangladesh, while also forming a strategic relationship to do business in Myanmar.
Vaidyan further said that the company is open to acquisitions to grow overseas if any good opportunity comes by.
GIC Re, which is wholly owned by the government, is going public with an initial public offer, expected to raise Rs 11,370 crore. It will be the largest public issue after Coal India's IPO in 2010.
In the IPO, the government will be selling 10.75 crore equity shares, while there will be a fresh issue of 1.72 crore shares from the company. The total offer constitutes 14.2 per cent of the post-issue paid-up share capital.
The price band for the offer is Rs 855-912 per share and the issue will be open for subscription from October 11 to October 13.
