The Hindu Business Line : AXA to provide reinsurance support to Bharti AXA

Bangalore, Sept. 16 Global insurance major AXA said it was committed to providing reinsurance support to its domestic joint venture, Bharti AXA General Insurance Ltd.

Mr Jan Van Den Berg, Chief Executive Officer, AXA’s General Insurance, Asia Pacific, said, “We are prepared to provide up to 20 per cent reinsurance support to our domestic joint venture.” The support would be through treaties. Reinsurance treaty is an agreement between the primary insurer and the reinsurer for automatic commitment to pick up certain categories of risks at predetermined reinsurance premiums. For the remaining reinsurance support, the joint venture would have to look at the national reinsurer and other global reinsurance companies, he added.

Bharti AXA General Insurance is a 26:74 per cent joint venture between global insurance major AXA and the Bharti group.

The reinsurance support is in addition to the committed capital support to the venture, which currently has a paid-up equity of Rs 230 crore.

To raise Paid-up equity

Bharti AXA’s Chief Executive Officer, Mr Amarnath Ananthanarayanan, said, “We intend to raise the paid-up equity by another Rs 600 crore over the next five years.”

Asked whether AXA would increase its stake to 49 per cent, after the passing of the Insurance Amendment Bill, Mr Berg was non-committal. Instead, he said, “I am not sure whether relaxing the limits will have any impact on us.”

He said the existing venture was adequately capitalised for meeting its growth requirements for the next five years. Instead, the focus would be to contain the combined ratio below the national average. The general insurance industry’s combined ratio is currently in excess of 120 per cent. The combined ratio (sum of incurred expenses and claims as a component of the gross premium earned) is a measure of profitability of insurance companies.

Mr Berg said that both the joint venture partners were committed to increasing the paid-up capital within the prevailing arrangements. He said the targeted paid-up capital was sufficient to meet the domestic joint venture’s growth requirements over the next five years. However, at present, the additional capital requirements were minimal, Mr Berg said.

Retail biz

Bharti AXA is expected to focus more on retail lines of business which included home, shop and rural insurance. The focus is largely in view of the losses in these sectors. Besides, these areas are currently under-insured.

For expanding into these areas, Mr Ananthanarayan said, “We are in talks with some of our bancassurance partners, mostly cooperative banks for bundling the risk products with home loans.” The focus would be non-metro centric, Mr Ananthanarayanan said. This implied that the joint venture’s business model would target tier-II cities and towns for building up critical mass, he added. Till July end this year, Bharti Axa earned gross premium of Rs 62 crore.

Related Stories:
Bharti Axa to raise authorised capital

More Stories on : Alliances & Joint Ventures | General Insurance

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
Tata Capital to raise Rs 2,100 cr by next fiscal

Manappuram’s credit rating moves to A1+

UCO Bank teams up with M&M

United India Insurance plans massive agency recruitment

United Bank achieves 100% CBS

Kerala setting up FI based on Islamic banking principles

RBI may hike HTM cap on bonds for banks

Banks told to set up special units for fraud risk management

PNB, Oriental Bank offer sops on retail loans

Low credit to bank performance

Call rate ends at 3.3%

Insurance staff stage protest

AXA to provide reinsurance support to Bharti AXA

South Indian Bank aims at 20% biz growth