String of natural calamities has GIC Re plunging into losses

State-owned reinsurance major GIC Re on Monday reported a net loss of Rs 1,556.50 crore for the nine months to December 2019, as against a net profit of Rs 1,621 crore a year ago, impacted by huge claims from across the world and also natural calamities impacting the domestic farm sector.

Against the backdrop of severe claims worldwide during the year 2019-20, higher agriculture claims and flood claims in various parts of the country, underwriting performance resulted in net underwriting losses to the Corporation, the management said in a note.

"The loss is primarily on account of provisioning for investments and increase in agriculture losses," the Corporation said, adding this had the underwriting loss soaring to Rs 5,903.60 crore from Rs 2,312.62 crore.

The only healthy business it had in the year so far is the fire segment, it added and guided towards a better Q4 given the overall hardening of pricing environment coupled with the Corporation pruning its portfolio to shore up the bottomline.

At a consolidated level, gross premium income grew 13.7 per cent to Rs 42,229.51 crore and investment income of the group rose to Rs 5,298.66 crore from Rs 4,817 crore.

Consolidated loss stood at Rs 1,496.08 crore against a consolidated profit of Rs 1,868.69 crore.

During the reporting period, gross premium income grew 15.7 per cent to Rs 41,812.29 crore for the nine months ending December 2019, while investment income increased 8.61 percent to Rs 5,216 crore.

It net premium rose to Rs 38,215.52 crore from Rs 33,221.19 crore, while the earned premium stood at Rs 36,476.66 crore, up from Rs 32,622.80 crore.

During the year so far, the Corporation had an incurred claim of Rs 36,148.44 crore up from Rs 29,956.63 crore, which in the entire 2018 stood at Rs 33,739.95 crore.

Reflecting the heavy losses, net worth, excluding fair value declined to Rs 19,350.67 crore from Rs 21,720.89 crore. However, total assets increased 7.66 per cent to Rs 1,28,509.76 crore.

International business grew 6.8 per cent to Rs 10,547.53 crore, but its share to overall income declined to 25.2 per cent from 27.3 per cent, while the domestic business grew 19 per cent to Rs 31,264.75 crore and its overall share in the total income pie to Rs 74.8 per cent from 72.7 per cent.

The incurred claims ratio increased from 91.8 per cent in the nine months to December 2018 to 99.1 per cent in December 2019, while the underwriting loss soared to Rs 5,903.60 crore from Rs 2,312.62 crore.

This had the combined ratio jumping to 115.76 per cent from 107.62 per cent and the adjusted combined ratio stood at 104.97 per cent up from 96.96 per cent.

However, the Corporation could maintain the mandated solvency ratio at 1.51.

GIC Re Group includes subsidiaries -- GIC Re South Africa, GIC Re Corporate Member, London, GIC Perestrakhovanie, Moscow -- and three associates -- GIC Re Bhutan, India International Insurance Singapore and Agriculture Insurance Corporation of India.