Warren Buffett to invest in India’s reinsurance market

General Re, a unit of Warren Buffett’s Berkshire Hathaway Inc. which won a license to open an Indian office in May, is seeking a larger slice of the world’s fastest-growing reinsurance market, Bloomberg reports.

According to the report, the unit plans to expand in health and life insurance, as well as explore opportunities in property and casualty cover, said Venkatesh Chakravarty, chief executive officer of General Reinsurance AG India Branch. The market is forecast to grow at an average annual growth rate of 9 per cent from 2017 to 2022, according to Reports Monitor. "Given the under-penetration of insurance, the growth momentum is expected to continue for both the insurance and reinsurance industry,” Chakravarty said. "India is an important market for us, which is the reason for setting up a branch. We are here for the long haul.” Building a business in India could help Gen Re’s turnaround. A glut of capital in the global reinsurance industry in recent years has caused prices for some kinds of coverage to sag. Rather than take on policies at those lower rates, Gen Re has said it’s turning away some business.

By contrast, India’s reinsurance market, grew at a compound annual rate of 26 per cent from 2012 to 2016, according to Reports Monitor, luring in global reinsurers. With competition heating up, Chakravarty emphasized that Gen Re would continue to prioritize profitability. "Gen Re isn’t focused on growing the top line or the market share at any cost,” said Chakravarty.

The report says that Buffett asked one of his top lieutenants, Ajit Jain, to oversee the reinsurer last year. Soon after, Jain wrote a lengthy memo to Gen Re’s staff suggesting areas where they could streamline operations and change how it does business to be more competitive. The efforts are starting to show. In the first six months, premium revenue climbed 7 per cent to $2.97 billion, driven by gains at the property-casualty unit. Underwriting results, however, have been hurt by an increase in costs tied to natural disasters. Gen Re may benefit from Indian insurers flocking to list their shares if IPO proceeds are used to write more polices, Chakravarty said.

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