Fairfax Group Gets Approval for New Reinsurance Company in India
Value Attics Reinsurance has been granted a reinsurance license by the Insurance Regulatory and Development Authority of India (IRDAI). This approval signifies a pivotal moment in the Indian insurance sector, as it marks the end of state-owned GIC Re’s five-decade monopoly, making Value Attics the first private-sector reinsurer.
The license was issued during IRDAI’s board meeting, which was the final one under the leadership of Chairman Debasish Panda, whose term concluded recently. The Indian government has already initiated the application process for the chairman position.
Value Attics is supported by the Fairfax group, a Canadian investment firm led by Prem Watsa, alongside Kamlesh Goyal. Watsa, who has previously collaborated with Goyal to establish Go Digit General and Life Insurance, is strategically expanding his presence in the Indian insurance market. However, Value Attics will remain independent of the existing direct insurance businesses.
Although IRDAI had previously granted a license to ITI Reinsurance in 2016, the company did not commence operations. Before launching Value Attics, Watsa had attempted to acquire ITI Reinsurance from Sudhir Valia, but the deal was rejected by IRDAI.
Value Attics is set to begin operations with a paid-up capital of Rs 200 crore. The company plans to leverage the expertise of Watsa’s global reinsurance businesses and utilize its robust balance sheet to underwrite substantial risks. The promoters are expected to make significantly larger investments in the future, considering their prior investments of Rs 4,400 crore in Go Digit General Insurance and Rs 1,400 crore in Go Digit Life Insurance, which are less capital-intensive than reinsurance.
Fairfax has a global presence in reinsurance through various subsidiaries. These include Odyssey Reinsurance in Connecticut, which provides underwriting for treaty, facultative reinsurance, and specialized insurance, and Allied World Assurance, offering reinsurance services through its subsidiaries. Polish Re also operates in Central and Eastern Europe.
During the board meeting, IRDAI reviewed the progress of the Risk-Based Capital (RBC) implementation and the status of Ind AS (IFRS) adoption within insurance companies. These discussions reflect the ongoing efforts to align with international financial standards. The meeting also covered the implementation of the risk-based supervisory framework and revisions to the Terrorism Pool framework.
