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| GIC scouts for African buy |
| Shilpy Sinha / Mumbai Jul 21, 2010, 00:57 IST |
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Low claim ratio in the international market prompts move.
In order to step up its global presence, national reinsurer General Insurance Corporation of India (GIC) is looking to acquire a reinsurance company in Africa.
“We are looking to acquire a company in Africa. The amount of investment will depend on the size of the company,” said Yogesh Lohiya, chairman and managing director, GIC. This will expand the reinsurer’s footprint in the region.
The reinsurer increased its share of international business from 38 per cent to 44 per cent at the end of March 2010. It plans to take this to 50 per cent by 2012.
The company is focusing on the global market because of the low claim ratio there. The reinsurer has a better experience in international than in the domestic market. Its claim ratio is around 105 per cent in the domestic market and 56 per cent in the international market.
“We reported an underwriting loss last financial year because of the high claim ratio in the domestic market,” said Lohiya.
The company is in the process of opening a branch office in Johannesburg. It has a minority stake in a few companies, including a 16 per cent stake in the East African Reinsurance Company.
“We have the option of either opening a branch office or acquiring a company. There is no use to keep a minority stake, so we need to opt for a major stake,” added Lohiya.
At present, Indian insurance companies are required to pass on 10 per cent of the liability to the national reinsurer. The limit was brought down from 15 per cent in 2007 to the present level in 2008. However, insurance companies have always parked more than this with GIC.
Out of the total risk placed with it, public insurers put 70 per cent with the national reinsurer. At the same time, private players lay around 60 per cent with GIC. Among international reinsurers, Munich Re, Lloyd’s, Asia Capital Re, Swiss Re and AIG are the prominent players in India.
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