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Radhika Menon

Mumbai, Jan 4 Domestic reinsurer The General Insurance Corporation has received approval to kick off operations through its London branch.

The corporation had for long been in the process of converting its London representative office into a branch.

“We have received approval from the Indian and the UK regulatory authorities to operate a branch in London. The formal inauguration will take place shortly,” said a senior official at GIC.

London is the capital of the global reinsurance industry as most companies go there to seek reinsurance support.

The Indian reinsurer has already deputed staff and put the systems in place for underwriting business from the London branch.

“London is a key centre and a complicated market place. It will provide us with expertise and guidance in doing business,” said the official.

Although many renewals have taken place at the beginning of January, the corporation hopes to do business to the tune of $100 million from its London branch in 2008-09.

The corporation has been looking overseas to expand its foreign portfolio, which currently contributes to 22 per cent of its overall business. This could go up to 50 per cent in the next 5-10 years.

It currently does business in Asia, Eastern Europe, Africa and West Asia. It has a branch in Dubai and a representative office in Moscow.

GIC sent teams to around 16 countries and 190 insurance companies to look at potential business opportunities overseas.

It acquired a 14.76 per cent stake in Nairobi-based East African Reinsurance Company.

The corporation has now set its sights on China and could look at setting up representative offices there by 2008-09, said the official.

The progressive reduction of obligatory cessions has prompted GIC to increase the contribution of its foreign business.

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This will be reduced to 10 per cent from April 1, 2008 and will gradually be fully withdrawn. Around 80 per cent of GIC’s domestic business currently comes from obligatory cessions.

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