GIC Re reports 7.8% drop in pre-tax profit at Rs 1,101 cr in Q4FY20

Country’s largest reinsurer – General Insurance Corporation (GIC Re) – has reported a 7.8 per cent decline in pre-tax profit in Q4FY20. The reinsurer’s pre-tax profit for the March quarter stood at Rs 1,101 crore compared to Rs 1,194 crore in Q4FY19. Net profit of the reinsurer jumped 98 per cent to Rs 1,197 crore in Q4FY20 compared to 603 crore in the same period a year ago due to lower tax provisions.

Combined Ratio of the reinsurer for FY20 stood at 114 per cent compared to 106 per cent in FY19. If the combined ratio is less than 100, then insurer is making underwriting profits. The company recorded underwriting losses to the tune of Rs 6,367 crore in FY20 compared to a loss of Rs 2,211 crore in FY19.

The insurer reported a 14 per cent increase on gross premium to Rs 9,217 crore from Rs 8,089 crore while for the full year, gross premium rose 15.35 per cent to Rs 51,030 crore in FY20 from Rs 44,238 crore in FY19. Among various business segments, life insurance reported a 75 per cent jump in premium, while fire segment reported a 17 per cent jump in premiums, marine recorded a 19 per cent jump and premiums in the miscellaneous segment rose 14 per cent in FY20.

Investment income of the reinsurer was up 19 per cent in Q4FY20 to Rs 1,909 crore from Rs 1,598 crore in the same period a year ago. For the full year, investment income rose 11 per cent to Rs 7,125 crore in FY20 from Rs 6,401 crore in FY19.

At the end of March quarter, the solvency ratio of GIC Re stood at 1.53. The regulatory requirement is 1.5.

“FY20 has seen the insurance industry register severe claims world-wide as well as in India. The explosion of the Covid-19 pandemic has further aggravated the situation leading to an impact on the financial markets and the economy in general”, said Devesh Srivastava, Chairman and Managing Director of GIC Re.