The Hindu Business Line : Pooling strengths of reinsurers in the region

`We are trying to make optimum use of the combined Asian capacity. The idea is to reduce dependence on US and European markets and take care of our own needs,' said Mr P.C. Ghosh, Chairman of GIC.

Kolkata , Aug. 12

GENERAL Insurance Co has proposed to assume a bigger role in the international arena. In Asia, it is trying to bring together like-minded reinsurance companies with a view to pooling their strengths.

It is seeking to leverage on what is being termed as `Asian Region Rating System' - a special attempt by a dozen major companies in the continent to power their reinsurance businesses.

The plan is to scale down the dependence on ratings provided by S&P and A M Best, two agencies that work out their own, separate ratings, ones that are used widely by international clients.

S&P, the premier rating agency, does not go by the financial strengths of a company. Instead, it follows the sovereign ratings assigned to specific countries. This makes GIC's case substantially weaker before an international audience.

As for A M Best, however, GIC has been assigned an `A (Excellent)' rating. In India, GIC is rated Triple A by CARE.

The 12 or so Asian outfits that are involved include companies based in China, Malaysia and Japan. These outfits meet annually. CARE, incidentally, was earlier asked to make a presentation before one such annual meet.

"We are trying to make optimum use of the combined Asian capacity. The idea is to reduce dependence on US and European markets and take care of our own needs," said Mr P.C. Ghosh, Chairman of GIC. He was addressing a CII seminar on insurance in Kolkata on Thursday.

The issue, he added, became particularly acute after the September 11 terror attacks in the US, after which some international companies applied limits on the business placed in the Asian region.

The corporation was also trying to develop greater expertise in the life sector, Mr Ghosh said. It has been dabbling in life for the past two years or so compared to the 30 years it has spent in general insurance. The idea is to offer its services to more takers, with the nature of risk ranging from the simple to the intricate.

Stating that the existence of multiple re-insurers is usually taken for granted in liberalised markets, the GIC chief referred to the broad plan of creating a diversified client base. "Insurers should come to us by choice. We need to become their preferred reinsurers," he mentioned.

On the global front, GIC is aware that the top ten reinsurers in the world share 35 per cent of the international business. This trend, in fact, is likely to continue, especially so because of the continued possibility of mergers and acquisitions.

In the emerging markets, there is a tendency to consolidate. Asian countries are still following the trends that have already emerged in developed markets, it is pointed out.

Elsewhere, GIC is looking at posting higher profits this year and improve on the business that it has generated at the end of the last fiscal. It has paid a 30 per cent dividend to the Government, amounting to Rs 67 crore.