`We have a small exposure for LA wildfires. It’s not major. Currently, we have provided about $25 million in our provisions. I tend to believe that this will come down, because these are very initial figures. We’ve still not received too many intimations from our clients. So, we will wait for that and revise it in the next quarter,’’ said N Ramaswamy, CMD , GIC Re
Mumbai: The recent Los Angeles(LA) wildfires that devastated the California economy and has saddled as much as $50 billion of losses on global reinsurers, has also impacted state owned GIC Re, which is expecting a $25 million of claims from the disaster.
GIC re, one of major players in the global aviation reinsurance market, has also provided $ 7 million for the recent American Airlines passenger jet crash near Washington and another small amount for deadliest air accident in South Korea that killed 179 passengers.
“We have a small exposure for LA wildfires. It’s not major. Currently, we have provided about $25 million in our provisions. Though this is basically an event, which has happened in the fourth quarter in January. but prudently, we have already provided for it in our third quarter results. I tend to believe that this will come down, because these are very initial figures. We’ve still not received too many intimations from our clients. So, we will wait for that and revise it in the next quarter,’’ said N Ramaswamy, CMD , GIC Re.
For both the losses, American Airlines and South Korean, GIC Re, the third largest Asia reinsurer has a very, small share. This will really not swing the needle in a big way at all, added Ramaswamy.
“We are one of the bigger aviation underwriters in the world. Going forward, with the rating upgrade having happened, we will get to see much more business. Aviation is quite a claim-free kind of a class to write, the safety factors are very high. But yes, there will be losses like what has happened here,’’ he explained.
GIC Re, the 10th largest global reinsurer, has increased its international business during the recent Jan 1 renewals, informed Ramaswamy.
“We wrote about 25% to 26% more business. But what we also saw in the market was there was a lot of capacity available. There was a lot of interest from reinsurance companies. So, to that extent, not all our business writing was accepted. So, we finally got a signing of about 15%, 16%, which overall means that in 1st Jan, we have written about $80 million more, that works out to about Rs 650 crores more,’’ he said.
International business has almost contributed 23% of GIC Re’s premium during the first nine months of the current fiscal. The reinsurer’s total premium for the nine months ended in FY 25 is reported to be Rs 30,786.87 crore. The domestic premium for the same period is Rs 23,657 crore, while the international premium is Rs 7,130 crore.
According to Ramaswamy, the global reinsurance market was quite range based during the Jan 1 renewals.
“ In fact, we did see softening of rates happening in certain markets, which did not have any catastrophic events. Markets, which did have catastrophic events saw some risk-adjusted rate changes going up. But overall, I thought there were a lot of capacities in the market, and it was a very soft market. But we got to write what we wanted. We’re pretty happy with the situation,” stated Ramaswamy.
Going forward, in FY ’25 and FY ’26, GIC Re will see a higher premium in the international market, predicted Ramaswamy.
“There were a lot of catastrophic events locally in Spain, in Italy, in the U.K. and around the world. But as long as pricing is adequate, I think capacities will be interested. And that’s what we saw early this year on 1st Jan renewals. There was much more capacity than last year available on the reinsurance market and that meant that the pricing was soft. I think going forward, this is what will dictate the capacity availability in the market,’’ suggested GIC Re chief.