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Shashi Ashiwal

Good going: Mr Yogesh Lohiya (right), CMD, General Insurance Corporation of India, and Mr R. Chandrasekaran, GM-Marketing, Reinsurance and IT, at a press conference in Mumbai on Wednesday. –

Our Bureau

Mumbai, Sept 26 General Insurance Corporation of India (GIC Re) is eyeing strategic stakes in local reinsurance companies in Eastern and Southern Africa. The corporation is also looking at the option of setting up representative offices in the region.

Mr Yogesh Lohiya, Chairman and Managing Director, GIC Re, said that the reinsurer was looking at expanding business in Africa by acquiring a strategic stake of 14-15 per cent in local companies in Eastern and Southern Africa. “We want to help these companies grow their business by becoming a part of their management but do not want controlling stake. The investment will be in the range of Rs 7-8 crore per company,” he said.

GIC Re is looking at expanding its international business particularly since obligatory cessions to the domestic reinsurer are being phased out. At present, the corporation does business in West Asia, Asia and Russia.

Currently, non-life insurance companies have to compulsorily place 15 per cent of their reinsurance business with GIC Re-which is known as obligatory cessions. This will be reduced to 10 per cent from April 1, 2008 and will gradually be fully withdrawn.

Mr Lohiya said the company hoped to increase the share of its international business from 22 per cent to 28 per cent of the portfolio. “In 5-10 years, we would like the break-up between domestic and foreign businesses to be 50:50,” he said.

The reinsurer is also in the process of securing approvals from the IRDA and Government of India to convert its representative office in London to a branch office. It currently has a branch office in Dubai and a representative office in Moscow.

GIC Re also plans to do selective business in the G7 countries, but will keep away from doing liability and catastrophy insurance policies.

In its attempt at becoming a player of international standing, GIC Re has appointed Deloitte as a consultant to work on areas like technology, human resources and evolve a vision for the company. The report is expected to be submitted in three months

On the potential threat to GIC if international reinsurers such as Munich Re and Swiss Re are allowed to set up branches offices (they are only allowed liaison offices in India), Mr Lohiya said, “We are not averse to them setting up shop in the country but we know India better than them. We don’t exit markets after catastrophic events such as 9/11 after whicch we formed a terrorism pool.”

The size of the terrorism pool today stands at Rs 1,200 crore and GIC Re is the manager.

About the falling premia rates in the detariff regime, Mr Lohiya said the fire and engineering rates had dropped by 45-50 per cent and in the last four months the total premium received from fire and engineering policies has fallen by Rs 200 crore, against the previous year. He added that the international reinsurance rates had also softened by 20-30 per cent.

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