IRDA gives R1 nod to ITI for reinsurance business

MUMBAI: The insurance regulator has given the first level approval to ITI, a company owned by Sudhir Valia, for reinsurance business. Valia is the brother-in-law of billionaire Dilip Shanghvi, the promoter of Sun Pharma.

The reinsurance market in India is estimated to be $2billion. ITI Investment is a subsidiary of Fortune Financial Services, which is controlled by Valia.

Sources in the financial services sector said the board of the Insurance Regulatory and Development Authority of India (IRDAI) has given R1 approval to ITI Investment. “ITI will set up a full-fledged reinsurance business here,” said a senior official, who did not want to be named. A spokesperson of Fortune Financial Services confirmed the development to ET.

Reinsurance companies planning to set up a full-fledged business need to have a minimum capital of Rs 200 crore while those planning to operate through branch would need at least Rs 100 crore capital.

A few years ago, Sudhir Valia had acquired a majority stake in Fortune Financial Services, a non-banking finance company.

Later, the finance company acquired ITI Investment, which had applied for reinsurance licence, sources said.

In 2015 when the rules were announced on reinsurance business, several global companies had applied to IRDAI seeking permission to start operations in India — a market they currently cater to through offshore deals.

So far, IRDAI has given R1 approval for setting up branch operation to four global companies — Germany’s Munich Re and Hannover; Swiss Re and the French firm SCOR.

In India, government-owned GIC Re is the only reinsurance company operating in India while global reinsurance companies sell covers from their overseas offices. GIC reported 6% rise in net profit to Rs 2,694 crore in 2015-16.

A company can start reinsurance operation after they receive R2 approval from the insurance regulator. Insurance businesses require three levels of approvals to begin operations.
The shares of Fortune Financial closed at Rs 176, almost flat over Wednesday’s close.