News Reinsurance22 Jan 2019

India:Allianz targets growth with new India reinsurance branch

| 22 Jan 2019

Allianz Global Corporate & Specialty SE (AGCS) yesterday officially opened its new branch office in Mumbai, having received the necessary reinsurance licence from the IRDAI earlier last year.

The new reinsurance branch allows AGCS, the dedicated carrier for corporate and specialty insurance business of German insurance giant Allianz SE, to further expand its presence across Asia Pacific to capitalise on growth opportunities in the Indian market and better serve global corporate clients with business interests in the country.

Located in Mumbai, AGCS India Branch will initially offer facultative, proportional, and non-proportional reinsurance solutions in the following lines of business: Property, Liability, Marine, Financial Lines, Construction & Engineering, and Energy. In particular, AGCS sees opportunities in large scale construction projects under the $106bn Bharatmala infrastructure development plan, as well as strong contributions from the automotive, electronics and high-tech communication industries, all of which complement AGCS’s areas of specialist expertise.

AGCS continues the trend of global reinsurance companies expanding operations into one of the fastest emerging re/insurance markets, following the Indian government’s move to amend regulations and open the reinsurance market to foreign companies in 2016. AGCS is no stranger to India, having worked closely with Bajaj Allianz and its Global Risks division since 2013.

Opportunities

AGCS sees the India corporate insurance market as holding significant potential due to its size, low penetration rates, and expected growth of the economy. India is the world’s 11th largest insurance market and 5th in Asia behind China, Japan, South Korea, and Taiwan by premium volume. However, industry estimates show that India only ranks 73rd in the world with a meagre non-life insurance penetration rate of 0.93% of GDP, suggesting opportunities for future growth as the market matures.

Indeed, industry estimates have predicted reinsurance premiums in India to increase at 11-14% CAGR, reaching $11bn in premiums by 2022. Similarly, the India economy has surpassed China as the world’s fastest growing economy every year since 2014, with the exception of 2017.

Ms SinĂ©ad Browne, AGCS board member and chief regions and markets officer for Asia Pacific, said, “India’s continued rapid growth and the opening up of the domestic reinsurance market to foreign owned insurers makes it the ripe time to have our own branch in the country. This will allow us to better help clients navigate the continually evolving risk landscape with local underwriting and risk management expertise. India has huge potential to develop into a major reinsurance hub in Asia and we aim to part of this future success story.”

Demand

AGCS also expects particular demand for reinsurance capacity for cyber and initial public offering (IPO) insurance, offered under the financial lines of business. Increased awareness and a strong digitalisation push amongst businesses have led to more enquiries on cyber risk and cover in the country. Significantly, India is ranked as the third most vulnerable country to cyber threats. India stock exchanges also ranked second globally in terms of IPOs, with the industrial sector being the most active in terms of number of IPOs issued.

The new branch in India will also benefit multinational AGCS clients with Indian business interests. For example, more than 20% of the clients AGCS serves under its international insurance programme, Allianz Multinational, have operations in India. The local branch will provide AGCS with larger access and priority to business ceded by Indian insurers than it would have as a foreign-based reinsurer, and places AGCS in a better position to offer its market-leading capacity and technical expertise to clients.

As a branch of AGCS SE, the office in Mumbai will benefit from AGCS’s strong financial ratings, and will continue to work closely with the regional office in Singapore. AGCS is rated AA by Standard & Poor’s and A+ by A.M. Best.

Local expertise

Mr CB Murali assumes the role of CEO of AGCS India. An Indian national, he has over 35 years of property & casualty insurance experience in both international and India markets. He was previously the head of Bajaj Allianz’s Global Risks division.

The India branch is the latest addition to AGCS Asia Pacific’s regional footprint, following on the heels of a new branch office in South Korea in 2017. AGCS is currently present in 11 countries and 16 cities in the region, a list that also includes Singapore, Hong Kong, Japan, China, Indonesia, Brunei, Myanmar, Australia, and New Zealand.


 

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