Berkshire Hathaway, controlled by Warren Buffett, is trying its luck for the second time in India. General Re, a part of Warren Buffet’s Berkshire Hathaway family of companies, has received the final approval — known as R3 — from the Insurance Regulatory and Development Authority of India (IRDAI) to open a reinsurance branch in Mumbai.
The new branch structure will now allow Gen Re to deliver underwriting and risk management expertise locally rather than cross-border. It will facilitate an optimal business model, Gen Re said.
This is the second major effort by Berkshire to enter India as its initial venture had closed its online distribution two years after it began operations in 2013. The online model failed to take off in a big way and Berkshire then closed down its online portal http://www.BerkshireInsurance.com. Berkshire then informed policyholders that their service needs would be handled by a dedicated team within Bajaj Allianz.
Gen Re will focus was primarily on the life and health sector. It will continue contributing and expanding in this segment while simultaneously exploring opportunities to grow its presence in the property/ casualty reinsurance market in India which is a huge business opportunity waiting to be harnessed.
Earlier, six other global reinsurers, including Reinsurance Group of America (RGA), Munich Re, Hannover RE, Swiss Re, XL Catlin and Scor, have received approval from IRDAI to start reinsurance operations. Lloyd’s opened its Indian branch last month and one of its syndicates, Amlin, has already started doing business while another syndicate Markel is considering to join the Lloyd’s platform. Currently, only one global reinsurer Axa Re is awaiting for the R2 approval, the second stage of regulator approval from the IRDAI and may start its operations in October-November.
Venkatesh N. Chakravarty will assume the role of chief executive officer and lead the Gen R branch. Venkatesh will also hold operational responsibility for the life/ health business. The property/ casualty business will be headed by Nighat Khan.
Winfried Heinen, Chairman of the Executive Board of Directors of General Reinsurance AG, said, “establishing a reinsurance branch in India is an important milestone for us. We firmly believe in the great potential of the Indian market, especially for life and health insurance products. With Venkatesh as our local head we have an extraordinarily professional and capable team in place to lead this important move. I am excited about the opportunities on the horizon.”
“The new structure will enable us to provide technical and risk management services locally. Beyond classic reinsurance of traditional lines of business, the development of innovative life and health insurance products with and for our clients is at the core of our value proposition. We are now ideally positioned to meet the demands and challenges of the market,” Chakravarty said.