GIC Re Posts First Underwriting Profit In 10 Years
Crop, marine insurance boost GIC Re’s underwriting profit in Q2.
Reinsurer General Insurance Corporation of India earned more from premium than it paid out as claims or expenses for the first time in over 10 years, largely on the back of its crop insurance business.
Underwriting profit stood at Rs 750 crore in the quarter ended September. It earned Rs 1,460 crore from agriculture premiums and Rs 270 for marine reinsurance. Underwriting losses nearly doubled to Rs 973 crore in the fire business. Health, motor and aviation portfolios also made losses for the insurer that went public last month.
For the six months ended September, underwriting profit fell to Rs 92 crore. That’s because of losses worth Rs 635 crore in the first quarter ended June.
The company’s combined ratio inproved marginally to 99.4 percent in second quarter compared to 102.7 percent in the year-ago period. A combined ratio below 100 indicates that an insurer is profitable in the underwriting business. Its claim ratio declined 405 basis points to 81.16 percent. (A basis point is one hundredth of a percentage point).
GIC’s solvency margin declined to 1.72, compared to 2.92 in the year-ago period. “Solvency levels dropping is not a matter of concern for us. It would just mean that we are effectively utilising our capital,” Alice Vaidyan, chairman and managing director, told BloombergQuint.
The recent initial public offer helped the company raise capital to augment its growth. “It will help us attain higher solvency margins and a comfortable level would be around 2,” she said.
- The reinsurer’s profit rose nearly fivefold to Rs 1,419 crore.
- Net premium earned, which is the total premium collected by the company during the period, rose 45 percent to Rs 9,707 crore year-on-year.
- Total income rose 45 percent to Rs 10,715 crore year-on-year.
- Net income from investments and foreign exchange gains also contributed to the increase in the second quarter.
- The state-run reinsurer’s investment yield improved marginally by 8 basis points to 11.32 percent.
- Gross written premium – both direct and assumed – declined 29 percent to Rs 7,210 crore. The net premium written over the period also fell nearly 61 percent to Rs 9,438 crore.
GIC’s shares ended 1.4 percent lower after the earnings announcement compared to a 0.8 percent decline in the benchmark S&P BSE Sensex.
(Updates numbers in first and second para and the headline after the company corrected its numbers)
