Warren Buffett-owned General Reinsurance (Gen Re) has sought regulatory relaxation to make use of its global capital to do Indian business in a cost–effective way. After receiving the final licence from the Insurance Regulatory and Development Authority of India (Irdai), the global reinsurer has just started its operations in the country.
Winfried Heinen, chairman of the executive board of directors of General Reinsurance AG, said linking Indian business with global capital will help the reinsurer to offer cheaper services in the country. “By law, we have to bring in $15 million (Rs 100 crore) and then we have to increase the capital as the size of the business grows. In my opinion, since we are a branch, the branch should not have capital of its own. A branch is part of a much bigger entity,’’ Heinen told The Indian Express.
Explaining Gen Re’s stand, Heinen said that to grow more in India, the reinsurer has to bring in more capital, which cannot be used anywhere else and that makes it more expensive to do business in India. “The higher cost will be reflected in the prices we can offer to our clients, and probably this will again be reflected in the prices they offer to their clients. This inefficiency has a knock-on effect on the customers,’’ he said.
Heinen said the company will focus more on the bottom line than the topline. “The market conditions are very tough in the general reinsurance business. We will be interested in focusing on our bottom line and not so much of our top line,’’ he said.
Justifying the decision to focus on bottom line, Rainer Schurmann, managing director, Property & Casualty, Treaty Asia, said that the prices are soft in the Indian general insurance market, and the market is burdened with underwriting losses. “Reinsurers are going after commercial business and not the retail business in India. The retail business is profitable for insurance companies,’’ he said.