Reinsurance companies may be allowed to invest in Overseas Sovereign Bonds to reduce the risk of their global portfolio, and to promote the country as a major reinsurance hub that could make it more attractive as an investment destination for companies. “The insurance regulator is working on relaxing investment norms for reinsurance companies, allowing them to invest outside India to diversify their risks,” a source close to the development told ET. “IRDAI is likely to allow these companies to invest in sovereign debt of other countries with A- and above rating. IRDAI is studying the regulations of other countries.”
GIC Re, the domestic reinsurance company, manages assets worth about Rs1.1 lakh crore.
Insurance companies buy reinsurance as protection for their balance sheets. Foreign reinsurance companies were allowed to open branches in India in 2015. Currently, there are eight foreign reinsurance companies operating through branches in India, with a couple awaiting approval to set up shop locally.
The Rs1.5-lakh-crore general insurance market has become attractive for foreign reinsurers. Of this, around Rs30,000 crore goes to reinsurance companies when insurers buy protection for their balance sheets.
“All reinsurance companies registered with IRDAI will be allowed to invest outside India to diversify the risk,” said a source. “This will need a change in regulations and IRDAI will have to come up with a notification. The regulations will be an outcome of a consultative process involving all stakeholders.”
License has been given by IRDAI to Munich Re, Swiss Re, Scor, Hannover Re, RGA, and ITI Reinsurance to open branches in India.
