Prem Watsa’s Digit Insurance, which is backed by insurance and financial services holding company, Fairfax Financial Holdings, has acquired India’s first privately owned reinsurer, ITI Reinsurance, from Fortune Financial Services of Sudhir Valia, according to reports.
Through Digit, Watsa, the Founder, Chairman and Chief Executive Officer (CEO) of Fairfax Financial, had previously applied for a reinsurance license in India under the name Valueattics Re. However, after the acquisition of ITI Reinsurance this application has now been withdrawn.
India’s only privately owned reinsurer, ITI Reinsurance was established in January 2017 in response to huge demand for reinsurance in the country.
Alongside state-backed reinsurer GIC Re, ITI Reinsurance benefits from first right of refusal before cross-border reinsurance companies can participate, something designed to encourage the establishment of more Indian players, but which some might view as protectionist.
While speculative, it’s possible that by acquiring a 100% stake in ITI Reinsurance, Watsa can gain entry into the India reinsurance market via his company’s backing of Digit Insurance.
Reports suggest that the board of the Insurance Regulatory and Development Authority of India (IRDAI) will take up the proposal on Friday, with the sale agreement already signed. Reports claim that a person familiar with the deal said the acquisition would cost roughly Rs 500 crore (roughly US$72.5 million).
