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May 1, 2015

New India Assurance to set up operations in GIFT

New India Assurance which is the country’s largest non-life insurer has decided to set up its reinsurance office in the SEZ area of GIFT City. GIFT City is the 1st IFSC of India and after the regulations for setting up operations were notified by the regulators, the companies have been showing interest in setting up business in GIFT City.

G Srinivasan, CMD, New India Assurance said that IRDA has prescribed the norms for Insurance companies which wants to set up offices in GIFT City. The company is already in the Reinsurance business which is currently being done from its London office wherein it gets business from Lloyds which works like an Insurance exchange.

Since it already has the capabilities and the necessary tie-ups, it will be easy for the company to set up an office in GIFT City and start doing the reinsurance business without much of a disturbance.

Currently, majority of the reinsurance business is being done at London, Singapore and Dubai. India’s GIFT City being an IFSC which is being categorized as a Foreign Territory for adhering to the government regulations, it will be easy for companies to compete with the existing IFSCs. GIFT City can become an Insurance hub because there are quite a few big Indian corporates which can use their Balance Sheet for leveraging and take such risks involved in Reinsurance business. 

It is expected that LIC is investing in building a tower in GIFT City and New India is poised to have an office in the same building. The reinsurance business in an IFSC has an advantage of keeping the premium received in Foreign currency accounts. This is beneficial and mitigates the foreign exchange risk at the time of settlement of claims.

New India reported a net profit of Rs. 1,431 crores for FY15 compared to Rs. 1,089 crores in FY14 which is a 31% increase in profits y-o-y. The Company’s global business stood at INR 16,050 crores which is a growth of 12% compared to previous year. The company has set a target of 18,000 crores for FY16.

 

 

 

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