Dividend cheque of Rs.1083.60 crore for FY 2022-23 was handed over to Finance Minister Nirmala Sitharaman by N. Ramaswamy, CMD, GIC Re with M P Tangirala, additional secretary, Dept of Financial Services (extreme left), and, Hitesh Joshi, general manager, GIC Re (extreme right)
GIC Re’s gross premium Income was Rs 36,591.59 crore in FY 2022-23, which translates into almost Rs 81 crore per employee during the year
“We will now make efforts to regain our A- rating. 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 topline. However, an inflexion point is reached, and we will be looking at profitable growth,’’ said N Ramaswamy,CMD, GIC Re
State owned reinsurer GIC Re, with just 450 employees, has created a new corporate history in India by topping the per employee profitability and revenue chart in the country during FY 2022-23.
The 16th largest global reinsurer, which had a total net profit of Rs 6,900 crore in FY 2022-23, has over Rs15 crore profit per employee during the year.
GIC Re’s gross premium Income was Rs 36,591.59 crore in FY 2022-23, which translates into almost Rs 81 crore per employee during the year.
Analysts point out that GIC Re’s performance in terms of revenue, and profitability per employee exceeds any company in public as well as private sector in India.
In a matter of comparison, with a net profit of Rs 36,397 crore and a staff strength of 1,14,000 during fy 2022-23, the life insurance behemoth Life Insurance Corporation (LIC) has a per employee profitability of Rs 30 lakh during the year.
Similarly, with a net profit of Rs 50,232 crore and total manpower of 2,45,000 during fy 2022-23 , PSU banking giant State Bank of India(SBI) has a per employee profitability of Rs 20 lakh during the year.
Even, HDFC Bank, one of the best run private sector banks, has a per employee profitability at Rs 28 lakh in FY 2021-22 before mortgage lender HDFC Ltd merged with it.
Reliance Industries, India’s largest company in terms of revenue, market capitalisation and with one of the best financial parameters among India INC, has on an average Rs 2.50 crore per employee during FY 2022-23, as compared to Rs 2.30 crore during the previous year.
The top four IT companies —Tata Consultancy Services, Infosys, HCL Technologies, and Wipro — earned a net profit of Rs 1.7 lakh per employee during Q3FY 23, up 8.6 percent from Rs 1.57 lakh in Q2FY23 and 16.3 percent from a record low of Rs 1.47 lakh in Q1FY23.
During his four- year stint, Devesh Srivastava, who retired as the CMD of GIC Re in September 30, 2023, had managed to succeed in reversing the reinsurer’s fortune from a loss making, with weak financial ratios, company to be one of the largest profitable companies not just in Indian re/insurance industry(where profitability is not an easy task) also across industries and companies in the whole country.
Sources said in the last four years, Srivastava created a new architecture for the reinsurance multinational, rewrote the every rules of the business and had opted for many harsh and strategic decisions to improve its combined ratio, solvency and ratings.
“Our balance sheet is our God now and remains sacrosanct,’’ said one of the GIC Re’s employee.
After almost three years since AM Best downgraded GIC Re’ rating, post sweeping restructuring of the company, AM Best had recently revised the outlook of GIC Re to positive from stable for the Financial Strength Rating (FSR) and to positive from negative for the Long-Term Issuer Credit Rating (Long-Term ICR) and affirmed the FSR of B++ (Good) and the Long-Term ICR “bbb+” (Good)
Additionally, AM Best has assigned the India National Scale Rating (NSR) of aaa.IN (Exceptional) to GIC Re. The outlook assigned to the NSR is stable.
With positive Credit Rating outlooks, N Ramaswamy, CMD , GIC Re, hopes that the third largest Asian reinsurer will be now in a position to get quality business from the overseas markets.
“We will now make efforts to regain our A- rating. 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 topline. However, an inflexion point is reached, and we will be looking at profitable growth,’’ said Ramaswamy.
The largest Indian reinsurer, which of late is facing competition from other top notch global reinsurers, which have set up their branches in India, had also for the first time grew its top-line in many quarters to Rs 10,755 crore, up 30 per cent over the corresponding period of the last year. it had been aggressively pruning its gross premium in the last few years to shed loss making business.
Analysts believe with comfortable solvency ratio, GIC Re will now maintain growth momentum in premium mobilisation.
GIC Re’s share price has also improved substantially from the rock bottom price of Rs 95 couple years back to hover around Rs 375 during the last week.