India’s largest reinsurer, General Insurance Corporation (GIC Re), recorded a pre-tax loss of Rs 811.22 crore in the first quarter, compared to a pre-tax profit of Rs 138.90 crore in the corresponding period of the previous year. In the previous quarter, the reinsurer had reported a pre-tax profit of Rs 1,101 crore.
Its net loss in Q1FY21 stood at Rs 557.46 crore, compared to a net profit of Rs 108.59 crore in Q1FY20. GIC Re’s gross premium income in Q1FY21 dropped 24 per cent to Rs 15,881.55 crore, compared to Rs 20,813.12 crore. It, however, recorded a 25.3 per cent growth in the fire insurance segment in Q1FY21 — with Rs 3,925.92 crore of premiums collected compared to Rs 3,134.14 crore in Q1FY20 — as other segments such as motor, health, agriculture, and marine saw contraction in premiums.
Its investment income for the reporting quarter dropped 18.5 per cent to Rs 1,142.83 crore, compared to Rs 1,401.90 crore.
“The global scene for the insurance industry for FY21 has shown weak trends due to the Covid-19 situation. Even though GIC Re has maintained its prominent position in the sector, there has been a reduction in business in Q1 because of strategic reduction of risk acceptance and a fall in overall direct premiums in India. GIC Re, however, expects to see rebound in business in the coming quarters,” the firm said.
Underwriting losses expanded to Rs 1,771.35 crore in Q1FY21, against Rs 854.37 crore in Q1FY20, while combined ratio rose to 112.16 per cent, compared to 102.63 per cent. Adjusted combined ratio of the firm stood at 105.88 per cent, against 97.24 per cent.
The combined ratio measures the money flowing out of an insurance firm in the form of dividends, expenses, and losses. Losses indicate the insurer’s discipline in underwriting policies. A ratio below 100 per cent indicates that the firm is making an underwriting profit, while a ratio above 100 per cent means that it is paying out more money in claims that it is receiving in the form of premiums.