In an exclusive interview with Asia Insurance Post, on the occasion of Rendezvous September, Monte Carlo, Devesh Srivastava, CMD, GIC Re highlights major achievements during his 4-year tenure as the head of the third largest Asian reinsurer. The period of consolidation is over and profitable growth is the mantra for the GIC Re, says Srivastava
How do you see the new developments and new dynamics in the global reinsurance markets and how GIC Re has repositioned itself to take the best advantages of the new situation? What are your broad agenda for the new market?
The rate increases have been unprecedented and has acted as a boon to our bottom line focussed approached. We will continue our profitability with growth approach and ensure price sufficiency in all our underwritings.
What are your broad messages for your domestic and international cedants for dealing with GIC Re in the new market situation?
We are putting our pricing approach on more sound technical basis and have tried pricing correction wherever we feel it is warranted. We will continue to maintain our long-term presence while forging new relationships.
The domestic market will be our mainstay of course, being our raison de etre.
Do you think, the situation which is favouring global reinsurers will last long?
This debate is the flavour of the season but given the geopolitical scenario, coupled with the VUCA environment in which we operate, accentuated by global climate changes that we are witnessing, this rate hardening of last year was not a flash in the pan I would say.
Globally there is a churn following record level catastrophe losses during last 3-4 years and the situation was exacerbated by the pandemic. It is expected that the premium hardening rates witnessed during last couple of years will sustain for at least for some time.
In the first quarter, you have increased your international exposure. Is it due to higher pricing or higher quantum of business? Will you maintain sourcing larger business from international markets forb the rest of the year?
We have always had a long-term vision of 50:50. Today, we are 70:30. We will look to grow our international book with caution ensuring price sufficiency.
Have you increased your exposure to the Asian markets? What are your plans for US and European markets?
Asian market is important for us given our deep footprint and market presence. We will
certainly try to enhance it. GIC has always been strong in the Afro-Asian market, and it was only the America where GIC did not have a meaningful presence.
However, with our Syndicate 1947 at Lloyds covering North America we are well serving our cedants through this platform in addition to our own writings of the US market from the head office.
How are you trying to improve your ratings?
We have done major pricing correction for domestic property segment during 2023 and 2023 domestic renewals.
Alongside, our streamlining of portfolio on the domestic agri and international property segments, we are quite sanguine about improvement in our performance going forward.
We are working assiduously towards its reinstatement and in achieving its objectives,
it is important that we write only keeping a bottom-line focus. The period of consolidation is over and profitable growth is the mantra.
A consistent endeavor has been made to improve the solvency ratio, loss ratio,
combined ratio, increasing customer satisfaction and retention.
Is the Indian market now learning to do business with better underwriting discipline?
We are bringing underwriting discipline through risk modelling for adequate pricing and
interaction with the global expertise.
The pandemic has brought under renewed focus, the resilience of the balance sheet and risk management processes of the risk carriers.
Interestingly, the Indian market is reacting well and supporting our endeavours.
You have been working on a full restructuring of GIC Re for last two years.Is it over? What are the objectives of this restructuring?
Restructuring is underway in terms of business portfolio composition and achieving pricing adequacy at contract level. This has involved process changes across the organization. The measures so far have focused on property and agri. This renewal we are also touching upon other classes.
In the past few years, GIC suffered huge underwriting losses in the wake of CAT Events. This had led to hit the balance sheet hard and ate away the investment income. After actualizing the situation GIC has restructured different segments and curtails few businesses which generate losses.
Our main objective is to maintain the solvency and control underwriting losses thereby improving our rating.
We have implemented the ambitious ‘Project Parivartan’, which will be a game
changer for HR transformation. Similarly, we are also going with full steam ahead for
the Project SAP Hana, which will assist our operations vastly. A paperless GIC Re is
our commitment to the environment.
You have been constantly reducing your top line growth and market is concerned about the shrinking capacity and falling support from GIC Re. Your comments.
Our prime focus is to mitigate the underwriting losses and maintain the underwriting
discipline. We are focussing on the bottom line alongside the reduction in top line. However, an inflexion point is reached, and we will be looking at profitable growth.
How does GIC Re is getting ready for new competition in the Indian market? Do you have aspiration to improve your global ranking also which has been falling in recent years?
The Indian market is big enough for all of us. With just 1% penetration, we have only
scratched the surface. Ranking is top line based. Our aim is profitability. We aspire to be among the top performing global reinsurers.
What are your other plans for the GIFT City, India’s first International Financial Services Centre(IFSC) ?
We would be scaling up operations and are evaluating various options.