June 3, 2015

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.

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“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.

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 Rs 500 crore, with health insurance contributing 20 per cent to its business. The portfolio grew 10 per cent in 2014-15, when the book grew 14 per cent for the insurer. A large part of the company’s health business comprises group policies.

The general insurance business reported net profit of Rs 18 crore for the quarter to March, down from Rs 27 crore in the year-ago period on account of about Rs 7 crore refund paid to health insurance policyholders.

After India allowed foreign players to own 49 per cent 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 per cent of liabilities, excluding assets, from 150 per cent 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.