In a historic move for India’s insurance sector, the Insurance Regulatory and Development Authority of India (IRDAI) has granted the “R2” licence to Value Attics Reinsurance, making it the first private-sector reinsurer in India after the state-owned GIC Re. This decision was made during IRDAI Chairperson Debasish Panda’s final board meeting.
Reinsurance is when an insurance company transfers some of its risk to another insurance company. This is done by purchasing a reinsurance policy from the other insurance company. The insurance company that buys the reinsurance policy is called the “ceding company”. The insurance company that sells the reinsurance policy is called the “reinsurer”.
A Step Towards Competition in Reinsurance
IRDAI, in its official statement on Thursday, said, “The authority reviewed and approved the R2 application of Value Attics Reinsurance, making it the first private-sector reinsurer after GIC Re. This marks a significant step in fostering competition within the reinsurance sector.”
With this approval, Value Attics Reinsurance is now closer to commencing operations but must fulfill additional regulatory requirements before starting business.
Promoters and Capital Investment
Value Attics Reinsurance is backed by prominent industry figures—Kamesh Goyal’s Oben Ventures LLP and Prem Watsa’s Fairfax Financial Holdings (through FAL Corporation). These entities are also promoters of Go Digit General Insurance and Go Digit Life Insurance.
The company will begin with an initial paid-up capital of ₹210 crore to support its operations. Kamesh Goyal, a key promoter, expressed his optimism about the development, stating, “There was a longstanding need to have private reinsurance players in India. Becoming India’s first private reinsurer marks a significant milestone for us.”
He also highlighted that this addition to the Digit Group of companies (covering general insurance, life insurance, and reinsurance) would create a comprehensive insurance ecosystem, offering full-spectrum risk coverage to businesses and individuals.
Reinsurance Landscape in India
Until now, GIC Re has been the only domestic reinsurer in India, operating since 1972. After the liberalization of the insurance sector in 2001, GIC Re was designated as the national reinsurer, with the advantage of the first right to refusal and obligatory cession rights.
As of December 31, 2024, GIC Re’s domestic business included:
- 39% obligatory business (mandated reinsurance)
- 61% non-obligatory business (voluntary agreements)
While India has relied primarily on GIC Re, 13 foreign reinsurance branches (FRBs) currently operate in the country, including global giants like Munich Re, Swiss Re, and Lloyd’s of London.
Previous Reinsurance Attempts and Industry Challenges
Value Attics Reinsurance’s approval marks a new beginning after previous unsuccessful attempts to establish private reinsurers in India.
- ITI Re, backed by Sudhir Valia’s The Investment Trust of India, received approval in 2016 but later surrendered its licence due to operational challenges.
- In 2018, IRDAI rejected Go Digit’s proposal to acquire ITI Re.
Industry experts believe that while Value Attics Reinsurance’s entry is a welcome move, it may face challenges related to capital requirements, risk retention, regulatory compliance, and global credit ratings.
Ashvin Parekh, managing partner at Ashvin Parekh Advisory Services, noted, “Reinsurance is a capital-intensive business requiring deep technical expertise and financial strength. The success of Value Attics Reinsurance will depend on its ability to manage risk, secure favorable ratings, and meet evolving regulations.”
IRDAI’s Key Decisions from March 12 Board Meeting
The IRDAI board meeting on March 12, 2025, also addressed several other important issues:
- Approval of the budget for FY25-26
- Investment considerations for public-sector general insurers in third-party administrators (TPAs)
- Updates on key initiatives such as Bima Sugam, risk-based capital framework, and Ind AS (IFRS) implementation
- Discussion on the status of the risk-based supervisory framework
With the regulatory green light, Value Attics Reinsurance is poised to reshape India’s reinsurance market, offering greater competition, more choices for insurers, and potentially better pricing for policyholders.
