Undaunted GIC Re plots to crack North America

It is targeting a top 10 reinsurance spot on a global basis, and to achieve this GIC Re must overcome a complex regulatory environment and shrinking panels to crack the North American reinsurance market. Yet the company is determined, says Alice Vaidyan, chairman-cum-managing director of GIC Re.

What are GIC Re’s ambitions for expansion in North America? Will you consider new offices and targeting certain lines in particular?
If you look at the relative transfer of risk between geographic regions, North American entities are “net insurance risk cedants”, ie, they cede more reinsurance premium than they assume.

Americas constitutes 16 to 20 percent of the global reinsurance premiums—clearly, this is a market we want to explore and be a part of given our ambitions of being a top 10 player globally. We are looking at Miami and Bermuda with keen interest but cannot comment on anything specific yet.


What are GIC Re’s ambitions for expansion in Latin America? Will you consider new offices?
As a matter of strategy, we want to be evenly placed across the globe. We already have “Eventual Reinsurer” status in Brazil and are in talks to upgrade that to an “Admitted Reinsurer” status. We have increased our visibility and engagement with the Latin American market and are on the look-out for strategic tie-ups and growth opportunities. These markets are diverse and evolving and we are keen to establish closer ties with regulators and insurance industry organisations for an onshore authorisation and greater play in the market.


What are the main challenges of seeking growth in North America?
Top of the list has to be the regulatory environment for re/insurers in the US which has grown vastly more complex in the wake of the global financial downturn. Add low interest rates and intense competition to the mix and you have a pretty daunting list for the new entrant. That said, GIC Re is confident of the value it brings to this market and we have increased our risk appetite for the region.

While the protection gap in emerging markets gets a lot of attention, the protection gap in developed markets like the US must also be high on the agenda for the industry and GIC Re is willing to put its capital to work.


What are the main challenges of gaining a foothold in this market?
The reinsurance panels are shrinking and the skillset to understand and quantify the risk particularly for the global entities with centralised reinsurance purchase is getting more complex. Clients already have their relationships locked in and in this environment for us to come in and convince them of our value proposition, getting them to trust our capabilities will take time.

Given the long-term outlook to reinsurance relationships, GIC Re is confident that an active dialogue and engagement with all the leading market participants will yield results in the near future.


What is your timeframe now on becoming a top 10 player globally?
We have been operating in the reinsurance space for only the last 16 years and managed to attain the 14th rank in this relatively short span of time. Breaking in to the top 10 is the next logical ambition and considering our rapid growth in the Indian and Afro-Asian markets coupled with our expansion efforts in Europe and the Americas, we have set ourselves the challenge of achieving it within the next 4 years.


What sets GIC Re apart from other reinsurers globally?
GIC Re is a well-capitalised reinsurer with deep knowledge and understanding of the Indian and Asian markets. Our technical expertise enables us to develop customised reinsurance solutions for every market and support the local insurers regardless of the prevailing market conditions. In addition, we are a central government-owned company, backed by a sovereign guarantee which instils immense confidence in our business partners across the globe.


What is your view on market conditions at the moment? Is anything likely to change?
The market is currently witnessing relatively soft market conditions, with availability of excess capital. There is immense competition among all the players in the market with pricing being the determining factor in the placement of reinsurance programmes.

Apart from some localised events, we have not seen any large scale natural catastrophes affecting multiple geographies, which would have led to huge claims and a concomitant hardening of rates. This soft phase of the insurance cycle is expected to continue but what we expect to change is the rate of innovation in the industry and the rise of insuretech.

Alice Vaidyan is the chairman-cum-managing director of GIC Re. She can be contacted at: alice.vaidyan@gicofindia.com