Fairfax baseball caps sit on a table at the Fairfax Financial Holdings Ltd., annual meeting in Toronto, Ontario, Canada (Photographer: Norm Betts/Bloomberg)  

Why IRDAI Rejected Watsa’s Bid To Acquire ITI Reinsurance

The insurance regulator rejected Prem Watsa’s proposal to acquire ITI Reinsurance Ltd. as it suspected this deal was merely being done to acquire the regulatory licence without following proper due diligence, two people aware of the development told BloombergQuint.

ITI Re—India’s sole private reinsurer promoted by Sudhir Valia’s Fortune Financial Services (India) Ltd.—has not done any business since it received its reinsurance licence in 2016, one of the persons quoted above said requesting anonymity since he is not authorised to speak to the media. According to disclosures on its website, the reinsurer had nil or negative premium income for financial years 2017 and 2018.

In June last year, ITI Re’s parent had sought approval from the Insurance Regulatory Development Authority of India to transfer 80 percent of its holding to Go Digit Infoworks Services Pvt. Ltd., backed by Canadian billionaire Watsa’s Fairfax Financial Holdings, one of the two people quoted earlier said. The ITI Re’s licence would have been used for starting another reinsurance company for which Go Digit had sought IRDAI’s approval, the person said.

Go Digit had approached the regulator last year to seek a licence for its reinsurance company, Valueattics Reinsurance Ltd. The proposal is still pending with the regulator, according to one of the people quoted earlier. Go Digit is the holding company for Digit Insurance, an online general insurance firm backed by Fairfax.

The Economic Times newspaper first reported on March 12 that the insurance regulator rejected Watsa’s plan to buy ITI Reinsurance.

Kamesh Goyal, one of the directors at Go Digit, refused to comment on BloombergQuint’s queries. Chintan Valia, member of board of directors at ITI Re, did not reply to text messages or phone calls. Subhash Chandra Khuntia, chairman at IRDAI, said he could not answer any company-specific queries.