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General Insurance Corporation of India (GIC), India’s sole re-insurer posted a profit after tax of Rs 2,253 crore for FY14, down 3.9 per cent from Rs 2,345 crore. This was due to the obligatory cession (Portion transferred from premium for reinsured risk) from GIC coming down to five per cent compared to 10 per cent in FY13.
“Due to the mandatory cession coming down to five per cent, we suffered a direct setback of Rs 3,500 crore. In spite of that, we have suffered minimum losses and, hence, this has been a satisfactory performance,” said A K Roy, chairman and managing director of GIC Re.
The company collected Rs 14,680 crore of gross premiums for FY14 as compared to Rs 15,086 crore in FY13. The net worth stood at Rs 10,969 crore in FY14. Due to the good equity market performance, GIC Re has an investment income of Rs 3,482 crore for FY14 as compared to Rs 2,895 crore in FY13. The company maintained a business ratio of 60:40 in its domestic and international businesses. It aims to have a 50:50 ratio by 2015.
GIC Re acquired South African reinsurer Saxum Re, as a part of its strategy of international expansion and is expecting to operationalise this new business by January 1, 2015. Further, Roy explained that they were also planning to enter the US market and are exploring opportunities on that front.
The reinsurer has planned to enter the specialist insurance market, Lloyd’s London, and is looking into mechanisms to do so. Insurance brand Lloyd’s is a market in which members join as syndicates to insure risks. Roy said they were very close to entering this market, but lost out in an acquisition opportunity since the pricing was not adequate. "We are still identifying targets, so that we can enter the syndicate," he said.
Also, GIC Re is closely examining the catastrophe bond market and is ready to enter it. Roy informed that a combination of Indian Rupees and US Dollars denomination would be the best suited model.
The non obligatory business has grown by 58 per cent for GIC Re and stands at Rs 3991 crore in FY14 compared to Rs 2500 crore in FY13. Similar to last fiscal, Roy added that the focus would be to add young talent to their team this fiscal.
Among the major claims, Uttarakhand floods and Cyclone Phailin contributed from India, whereas GIC Re took a $8 million hit in the fire incident at South Korea-based semiconductor firm S K Hynix, that took place in China. GIC Re also made some payments in the Malaysian Airlines MH370 incident, in which the reinsurer had 3.5 per cent share of the total claims.
