Known as ‘the Indian reinsurer’, General Insurance Corporation of India (GIC Re) is an acknowledged leader in its sector.
Spearheading the reinsurance programmes of companies in the South Asian Association for Regional Cooperation (SAARC) nations, African countries and the Middle East, and managing the Federation of Afro Asian Insurers and Reinsurers (FAIR) Nat Cat Pool, GIC Re is the preferred reinsurer in the Afro-Asian region.
Now with a string of accomplishments under its belt, such as managing the Marine Hull Pool, the Indian Terrorism Insurance Pool and the Motor Third Party Declined Risk Insurance Pool for commercial vehicles on behalf of the Indian insurance industry, the reinsurer is taking bigger and bolder steps to increase its global footprint.
With branch offices in Dubai, London and Kuala Lumpur, as well as a representative office in Moscow and a joint venture in Bhutan, GIC Re is set to embed itself into its latest venture.
“GIC Re has been growing at around 10 percent on a year-on-year basis from 2001 when we became a pure reinsurance company,” says Ashok Kumar Roy, chairman-cum-managing director at GIC Re.
“In the initial years a substantial part of our business came from the mandatory cessions from the direct companies, who were still in an establishing mode so needed some hand-holding. Now as the market is maturing, retentions have gone up and mandatory cessions have over the years come down from 20 percent to 5 percent with restrictions.”
As GIC Re continues to grow, increasing the company’s footprint in both new and existing regions is an important part of the reinsurer’s evolution.
A new venture
An attractive market that held some importance for GIC Re, Africa has been a focal point for the company.
“It is essential that we look beyond our shores to maintain our growth rate,” says Roy. “From the very beginning, even during the pre-liberalisation era, Africa has been a focal point. We are one of the founder members of FAIR. We also have strategic investments in a couple of African insurance and reinsurance companies, so the next logical step was to grow inorganically in that continent.”
To grow inorganically and enter the South African market it was important to look for an acquisition. An opportunity arose in the form of Saxum Re. In April this year the composite reinsurer Saxum Re became GIC Re’s first acquisition and first 100 percent subsidiary. The purchase cost around ZAR 25 million ($2.3 million).
“We saw value in this acquisition, and found it a ‘value-for-money’ proposition so sealed the deal. As a leading reinsurer, part of our strategic plan is to be placed across the globe, and our expansion in South Africa is also a part of that strategy.
“Many studies and assessments have described the African continent as the next insurance success story. In fact many have termed the growth of the South African insurance market as explosive.
“Gross written premium increased from ZAR 63,499,758,000 ($5.89 billion) in 2008 to ZAR 79,407,420,000 ($7.37 billion) in 2011. Today there are eight major reinsurers in the South African market and we would be one of them. This will give a boost to our overseas portfolio. We are hopeful of writing substantial business in the first year of our operations there,” says Roy.
“We will, of course, be making further investments for operational purposes. However, this gives us an opportunity to commence our operations in South Africa and it will serve as our gateway to reach out to the entire African continent, which is a promising prospect.
“The Johannesburg-based composite reinsurer Saxum Re underwrites both life and non-life business, and is now the only 100 percent subsidiary of GIC Re.”
GIC Re is already among the six Asian reinsurers that feature in the top 20 of the 2013 S&P rankings for global reinsurers, and Roy hopes it will move into the top five. Inorganic growth is part of the overall expansion and growth strategy.
However, Roy states, the company is not on an “acquisition spree”.
“We shall be on the lookout for targets and only if something of value is sighted shall we proceed further. As of now there is no such target in sight,” he says.
Ashok Kumar Roy is the chairman-cum-managing director at GIC Re. He can be contacted at: firstname.lastname@example.org