`Our results during the quarter are more or less as per expectations. Domestic premium this quarter has come down due to our decreasing agricultural business. Combined ratios have gone up in domestic due to two natural catastrophic events in the quarter,” said N Ramaswamy, CMD,GIC Re
With a larger investment income, State owned GIC Re has logged a 27 per cent year-on-year(Y-O-Y) jump in its net profit to Rs 1,518 crore in Q3 FY 2023 24.
After, growing its premium base by almost 33 per cent in the last quarter, India’s largest reinsurer has cut down its premium by 14 per cent to Rs 8,778 crore during the reporting quarter.
It has sourced almost 30 per cent of its gross premium from overseas markets.
“Our results during the quarter are more or less as per expectations. Domestic premium, this quarter has come down due to our decreasing agricultural business,” said N Ramaswamy, CMD, GIC Re.
With the ongoing bull run in the stock markets, the reinsurer’s investment income has soared by almost 20 per cent y-o-y to Rs 3,093 crore in third quarter ending Dec 31.
Though, the company’s underwriting losses, at Rs 1,547 crore, have almost remained flat during the quarter, its combined ratio has gone up from 116.22 per cent in Q3FY 23 to 120.47 per cent in Q3 FY 24.
Any combined ratio above 100 per cent means the reinsurer has paid more claims over its premium income causing underwriting losses.
The company’s combined ratio, in the nine-month period, has, however, remained at 98.67 per cent.
The combined ratios have gone up in domestic due to two natural catastrophic events in the quarter. In foreign book, one treaty written a few years ago is now adversely affecting motor portfolio, explained Ramaswamy.
The 16th largest global reinsurer had a total provisioning of around Rs1600 crores during the last nine moths of the fiscal to meet any future claims, he added.
Analysts pointed out with a series of nat cat events including Chennai floods, during the recent past in India, a provisioning of Rs 1600 crore by GIC Re indicate not so much hit for the reinsurer from the claims point of view.
The incurred claims of the third largest Asian reinsurer has fallen by Rs 381 crore to Rs 8,000 crore in Q3FY24, though, its incurred claim ratio has increased to 103.09 per cent in Q3FY24 from 96.90 per cent in the year-ago period.
The reinsurer’s solvency ratio has further risen to 2.94 in Q3FY24 over 2.38 in the corresponding quarter of the previous fiscal.
The reinsurer has reduced its exposure in portfolios like Fire, Crop and Marine Hull while increasing its premium in segments like Motor, Health, Life and Marine Cargo during the first nine months of the current fiscal.
With a combined ratio of 105.07 in the portfolio, GIC Re has shrank its capacity by 34 per cent to Rs 3,137 in its third largest portfolio- Crop- during first nine months of the current fiscal.
Analysts point that with a high solvency ratio of 2.94, the reinsurer is still acting cautious in expanding its top line to protect its bottom line.
GIC Re’s profit after tax for the nine months of the current fiscal was Rs 3,854.82 crore as compared to Rs 3,748.66 crore for the corresponding period of FY 23.
Gross Premium Income of the company was Rs 28,458.11 crore for the nine months ended Dec 31 as compared to Rs 29,221.85 crore in the year-ago period.
Its total assets are Rs 1,74,882.51 crore as on Dec 31, 2023 as compared to Rs 1,58,526.70 crore as on Dec 31.12.2022.
Net worth of the company (without fair value change account) recorded at Rs 35,031.89 crore on 31.12.2023 as against Rs 29,761.80 crore as on 31.12.2022.
GIC Re, with a 60 per cent of market share, competes with top 11 top global reinsurers which are having branches in India and 300 cross boarder reinsurers(CBRs) to grow its India business.
In the last couple of years, the reinsurer had undertaken an extensive restructuring of its business to boost its solvency and to be profitable by shedding loss making segments
With robust financials, international rating agency 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.