In Debasish Panda’s last board meeting as chairperson of the Insurance Regulatory and Development Authority of India (Irdai), the regulator approved the “R2” licence for Kamlesh Goyal and Prem Watsa-backed Value Attics Reinsurance, making it the first private-sector Indian reinsurer after GIC Re, the public-sector reinsurer.
“The authority reviewed and approved the R2 application of Value Attics Reinsurance, making it the first private-sector reinsurer after GIC Re, the public-sector reinsurer.
"This marks a significant step in fostering competition within the reinsurance sector,” Irdai said in a statement on Thursday.
With the R2 approval, the company is one step closer to commencing reinsurance operations.
However, it can begin business only after meeting the requirement of bringing in the
Value Attics Reinsurance is owned by Oben Ventures LLP, promoted by Kamesh Goyal, and FAL Corporation, backed by Prem Watsa with Fairfax Financial Holdings. They are also the promoters of Go Digit General Insurance and Go Digit Life Insurance.
The company will start with an initial paid-up capital of Rs 210 crore to begin operations, it said in a statement.
“There was a longstanding need to have private reinsurance players in India, and becoming India's first private reinsurer marks a significant milestone for us.
"With this, the Digit group of companies (general insurance, life insurance, and reinsurance) will strive to become a one-stop solution for all insurance needs, allowing us to provide full-spectrum risk coverage,” said Kamesh Goyal, Value Attics Reinsurance.
In India, state-owned GIC Re is the only domestic reinsurer, conducting reinsurance business since 1972.
Post liberalisation of the insurance industry in 2001, GIC Re was designated as the national reinsurer and has the advantage of first right to refusal and obligatory cession.
As of December 31, 2024, obligatory business accounted for 39 per cent of GIC Re’s domestic business, while 61 per cent was non-obligatory business.
Currently, there are 13 foreign reinsurance branches (FRBs) set up by global reinsurance companies, including Munich Re, Swiss Re, and Lloyd’s of London, operating in India.
In 2016, ITI Re had received approval from Irdai for reinsurance but surrendered it back to the regulator without doing business due to operational issues.
In December 2018, Irdai had rejected a proposal from Go Digit to acquire ITI Re. ITI Re was set up by Sudhir Valia-backed The Investment Trust of India.
“It’s an interesting initiative. However, there may be challenges related to capital requirements as the book grows, such as the extent of risk retained and receded, the ratings from Irdai-approved rating agencies, and the regulations associated with investments in India.
"Generally, reinsurance is a very capital-intensive segment, requiring technical expertise and a deep understanding of the business,” said Ashvin Parekh, managing partner, Ashvin Parekh Advisory Services.
“It is a welcome move and good for the industry. The promoters have deep pockets and expertise in the segment, as reinsurance is a capital-intensive business.
"They can start Indian operations with the existing capital, and as they enter international business, they can apply for ratings approval, which is based on capital strength, balance sheet, personnel, and systems,” said a reinsurance expert.
Irdai’s board met on March 12, where, along with approving Value Attics Reinsurance, it approved the budget for FY25-26, reviewed investment considerations for public-sector general insurers in health insurance third-party administrators (TPAs), and was apprised of key initiatives such as Bima Sugam, risk-based capital, and Ind AS (IFRS) implementation.
The status of the risk-based supervisory framework was also discussed.
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