N Ramaswamy, CMD, GIC Re
Though the largest Indian reinsurer has cut down its gross premium by 21 per cent to Rs 8,413 crore in the reporting quarter, it has improved its combined ratio, underwriting losses and incurred claims during the period
“Our continuous focus on rigorous risk assessment and disciplined underwriting practices has resulted in maintaining a healthy combined ratio. We remain optimistic about our future, supported by an improving external environment and our disciplined approach to managing our book” N Ramaswamy, CMD, GIC Re
Mumbai: State owned GIC Re has recorded a net profit of Rs 1,861 crore, up 16 per cent year-on-year(Y-o-Y) in Q2FY25.
Though, the largest Indian reinsurer, with over 60 per cent market share, has cut down its gross premium by 21 per cent to Rs 8,413 crore in the reporting quarter, it has improved its combined ratio, underwriting losses and incurred claims ratio during the period.
In the first six months of the current fiscal, GIC Re, the 10th largest global reinsurer (latest AM Best ranking in the non-IFRS category) has mobilised 78 per cent of its premium from the domestic market(rest from overseas market) where it competes with a dozen of multinational reinsurers, which have set up operations in India and scores of cross boarder reinsurers, that provide cheaper covers sitting outside the Indian shore.
With a combined ratio of 114.05 per cent in Q2FY 25 as against 115.83 per cent in the year-ago period, the third largest Asian reinsurer has managed to reduce its underwriting losses by 26 per cent y-o-y to Rs 1,088.43 crore in Q2FY25.
The reinsurer’s incurred claims (IC) has fallen by 15 per cent y-o-y to Rs 8,285 crore in the reporting period while its investment income has risen by six per cent to Rs 3,483.34 crore during the period.
The solvency ratio of the reinsurer as on September 30, 2024, stood at 342 per cent, compared to 282 per cent as on September 30, 2023.
“Our continuous focus on rigorous risk assessment and disciplined underwriting practices has resulted in maintaining a healthy combined ratio.It has been our constant endeavor to bring down the combined ratio of our book and enhance our overall performance. We remain optimistic about our future, supported by an improving external environment and our disciplined approach to managing our books. Our broad portfolio diversification continues to position us well for sustained success. As we look ahead, we remain committed to executing our strategy and delivering value to our stakeholders,”,” said N Ramaswamy, CMD, GIC Re.
On a half yearly basis, the reinsurer has remained bullish on Health business and has expanded its exposure in the segment by 123 per cent to Rs 4,840 crore while cutting down its capacity for Motor, Crop and Marine business.
It has grown its Life business by 22 per cent to Rs 865 crore in the first six months of the current fiscal.
“We want to spread our books to ensure that we also move away from catastrophic business as much as we can. And health has been a good area for us to do. Typically, retail health is something that doesn’t come much into the reinsurance market because insurance companies have the wherewithal and the capacity to retain it to themselves, but we’ve managed to get some good retail business this year which we wrote on 1st April. We will remain bullish on Health business going forward,” said Ramaswamy.
A few days back, AM Best has upgraded the ratings of GIC Re.
The Financial Strength Rating rating of the reinsurer was revised upward to A- (Excellent) from B++ (Good) and the Long-Term Issuer Credit Rating to “a-” (Excellent) from “bbb+” (Good).
In addition, AM Best has revised the Credit Rating (rating) outlooks to stable from positive. Furthermore, AM Best has affirmed the India National Scale Rating (NSR) of aaa.IN (Exceptional) with a stable outlook.
The ratings reflect GIC Re’s balance sheet strength, which AM Best assesses as very strong, as well as its adequate operating performance, favourable business profile and appropriate enterprise risk management. In addition, the ratings factor in a neutral impact from the company’s ownership by the government of India.