| May amalgamate it with Cigna TTK; move aimed at boosting performance of general insurance biz
Reliance Capital may spin off its health insurance unit into a separate company and amalgamate it with Cigna TTK, a move aimed at boosting the performance of its general insurance business. Cigna TTK Health Insurance, a joint venture between the United States-based global health services leader Cigna Corporation and Indian conglomerate TTK Group, had launched its operations in February 2014.
“The two sides are in talks whereby TTK will exit the business and Reliance General will get in. The companies are discussing the modalities,“ said a senior executive familiar with the development. Reliance General is the only general insurance company completely owned by an Indian promoter. In the life insurance sector, the company has a joint venture with Japan’s Nippon Life.
“We are in the process of hiving off our health insurance business,“ said Sam Ghosh, CEO of Reliance Capital.
In an email response, Cigna TTK’s spokesperson said, “Both Cigna and TTK Group are committed to the JV business in India.“ Reliance General has made premium income of ` . 500 crore, with health insurance contributing 20% to its business. The portfolio grew 10% in 2014-15, when the book grew 14% for the insurer. A large part of the company’s health business comprises group policies.
The general insurance business reported net profit of ` . 18 crore for the quarter to March, down from ` . 27 crore in the year-ago period on account of about `. 7 crore refund paid to health insurance policyholders.
After India allowed foreign players to own 49% in an insurance company, many global insurance companies have started looking for a tie-up with local partners. Companies including South Africa’s Discovery and US based Aetna have been scouting for partners to set up health insurance subsidiaries in India. The Insurance Regulatory and Development Authority is looking at framing different rules for health insurance companies after the amendment to the insurance Bill, which empowered he regulator to frame differentiated norms. Health insurance was earlier clubbed with general insurance.
The regulator is planning to lower capital requirement for health insurance to 100% of liabilities, excluding assets, from 150% at present. Like capital adequacy for banks, insurance companies are mandated to keep aside capital as solvency margins. There are five standalone health insurance companies in the country . Birla and South Africa-based MMI Holdings have filed applications with the regulator to enter the health insurance sector.
Health insurance is the fastest growing segment of general insurance industry, expanding 20% in 2014-15 against 9% for the broader segment.
Source:-The Economic Times (Mumbai)
Date:- 2nd June,2015