With a record premium income of Rs 41,799.37 crore, up 24.5 per cent, the state-run GIC Re has posted a net profit of Rs 3,233.59 crore, up three per cent, in 2017-18.
The Indian insurer, that got listed recently in the Indian bourses with over Rs 11,000 IPO, has announced a bonus in the ratio of 1:1 and declared a dividend of 270 per cent during the reporting year.
“The year has been a difficut one for the global reinsurance industry with international players hit by the large catastrophe losses that have a strained their key financials. After 2011, we have experienced such losses in 2017-18 in terms overseas claims, Despite this, our performance has been remarkable in respect of premium growth and maintaining profitability for the year against the backdrop of this record global catastrophic loss activity.’’ said Alice Vaidyan, CMD, GIC Re while announcing the resultsof the company on Friday. adding that the reinsurer has announced bonus and higher dividend to keep the investors happy.
Vaidyan was bullish about the growth and profitability prospect of the company in the coming years.The new health scheme (National Health Protection Scheme) will be value accretive and will support that.
“We are the leader in the Indian reinsurance market and has 60 per cent of the market share despite the presence of almost all global players in the market. We are growing at 25 per cent while the Indian industry is growing at 17 per cent. I am bullish about the growth and profitability prospects for the GIC Re in coming years. The domestic market is increasingly providing larger opportunities while our international operations will get boost by our new syndicate that has already started operations in Lloyd’s of London,’’ said Vaidyan.
The GIC Re's Combined Ratio in 2017-18 was at 104 per cent as compared to 99.7 per cent in 2016-17.The underwriting losses of the company has jumped by 150 per cent to Rs 1,497.42, in 2017-18 due to catastrophe losses in Harvey, Irma and Maria in the USA and the Caribbean alongside Mexican earthquake and California wildfires, which hit the insurance and reinsurance industry profitability in a major way.
A combined ratio above 100 percent indicates that a company's claims payment amount exceeds premiums collected.
“We have improved in the domestic market where our combined ratio stood at 96 percent. This has been done through our pricing power in the market and also because we are a dominant player in India.While domestic business has become viable, we are hoping that the international business will also see an upward positive trend in FY19.'' explained Vaidyan.
GIC Re’s Incurred Claims Ratio(ICR) increased from 81per cent in 2016-17 to 86.5 per cent in Fy 2018 while Combined Ratio of the company was at 104 per cent for the reporting period as compared to 99.7 per cent in 2016-17.The underwriting losses in the fire segment went up to Rs 897.33 crore in FY 18 as against Rs 496.24 crore in previous year.
“We have taken a hit in the property segment as well as the agriculture segment. In the agriculture segment, while losses didn’t happen in the first year of PMFSY, losses have happened in the second year.We have reserving for future claims as well and not just for past claims. So, we made provisions for that on your books as well. This is reflecting as higher losses,'' commented Vaidyan.
The reinsurer’s investment income increased by 17.6 per cent to Rs 5,392.03 crore in FY 2018 as compared to Rs 4,584.35 crore in 206-17.
Solvency Ratio of GIC Re was at 1.72 as on 31 March 2018, that is above the minimum required Solvency Ratio of 1.50.
The company’s Fire portfolio has expanded by 23 per cent to almost Rs 1000 crore while the Motor business has gone up by 21.5 per cent to Rs 8.045 crore in 2017-18. Agri business, which is a part of Prime minister Fasal Bima Yojana(PMFBY) and has been contributing to the premium growth of Indian general insurance market, has added Rs 13,139 crore, up 35 per cent, to the GIC Re’s premium kitty in 2017-18. GIC Re has 46 per cent of market share in agri business.The company’s health portfolio at Rs 5,300 crore has gone up by 27 per cent in 2017-18.
The total assets of the company increased by 16.1 per cent from Rs 94,948.62 crore as on March 31,2017 to Rs 110,226.98 crore as on March 31,2018.
Net Worth of the company (without fair value change account) increased by 19.9 per cent to Rs 21,525.92 crore in 2017-18 from Rs 17,946.63 crore in 2016-17.
GIC Re received 71.32 percent of its total premium from the domestic business while the rest constituted the international business.
In benchmarking in terms of its performance against the best-in-class global players, GIC Re has moved from 12th largest global reinsurer position in 2016-17 to 11th largest position in 2017-18 and can be expected to emerge into top 10 global reinsurers in near future.
Q4 FY 2018 performance
GIC Re posted a 71 percent year-on-year (YoY) drop in its March quarter net profit at Rs 751.6 crore, due to an underwriting loss of Rs 1,169.crore.
The reinsurer had posted a net profit of Rs 2,572.83 crore in the fourth quarter of FY17.The incurred claims ratio rose to 94.47 percent in Q4FY18 as against 70 percent a year ago.