New Delhi, April 5: General Insurance Corporation, the national reinsurer, is close to signing a memorandum of understanding with Life Insurance Corporation to reinsure the business that LIC’s Sri Lankan arm generates.
“We have already sent the draft of the legal document for LIC’s approval. Most probably, we will enter into an agreement to reinsure their Sri Lankan venture next week,” P.P Deshmukh, head of GIC life reinsurance, told The Telegraph.
LIC re-entered the life insurance market in Sri Lanka last year when it tied up with the Bartleet Group of Companies of Sri Lanka.
Sources in LIC said that though LIC Lanka (the Sri Lankan life insurance joint venture) has started commercial operations, it will be some time before it can build a viable client base.
Deshmukh said, “The assets and liabilities of the Sri Lanka life insurance venture is constantly under evaluation. The Sri Lankan way of living is quite similar to India. Also, the mortality table or the loss ratio of lives are more or less similar to India’s. So, it should not be difficult to reinsure.”
LIC used to operate in Sri Lanka till the industry was nationalised in 1961. Foreign companies were again allowed entry in the late 1980s.
GIC aims to earn reinsurance premium of up to Rs 25 crore in the next four years. “We hope to earn at least Rs 2 crore premium from LIC Lanka venture,” said Deshmukh. This will be GIC’s first life reinsurance business since it opened a life reinsurance department earlier this year. The national insurer is currently in talks with Indian private life insurers as well as Korean and African insurers to sharpen its life reinsurance portfolio.