Expecting competition to increase manifold once the Bill seeking to raise FDI in insurance sector gets the nod, the country’s sole re-insurer GIC Re is planning an aggressive inorganic growth strategy to ramp-up its global footprint.
The Insurance Amendment Bill, pending for Parliamentary approval, seeks to increase Foreign Direct Investment in the sector, including the reinsurance segment, to 49 per cent from the present 26 per cent.
The industry is expecting at least 10-15 global re- insurers to enter the domestic market once the new Insurance Bill is passed, directly competing with the state-run GIC Re.
“We are expanding our operations on foreign soil. We have acquired Saxum Re, a South African firm, early this year and we are working on to acquire one from llyods in london,” GIC Re chairman and managing director A K Roy told the news agency.
“We are waiting for the right opportunity for this. We are also venturing into the US markets, which is the world’s largest general insurance market,” he said.
However, the chairman did not offer any details about the geographies that his company is scouting for acquisitions, the time line or the size his war chest for buyouts.
Roy also said at GIC Re, expansion is an ongoing process and that expansion has to be stabilised and streamlined so that it starts generating revenue and profits. “If there is any entity available which gives us a business sense anywhere in the world, we are ready to acquire the same,” he said.
The city-based re-insurer gets almost 50 per cent of its Rs 15,000 crore premium income from overseas markets and targets to be one of the fifth largest globally by 2025 and is therefore keen to expand overseas to fuel growth and expansion.
Roy said the company does not want to grow its domesticbusiness beyond 50 per cent of its global premium to better manage risks. “We are already overexposed in the domestic market and we can’t go any further, because of the risk factor involved in it. Reinsurance is always a cross-boarder business,” he said.
Roy explained that GIC Re is not going to overseas markets only for the sake of expansion. “It depends on a lot of back- end preparations and it requires manpower too. But, at the same time if a good opportunity for expansion comes, we will look at it,” he said.