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General Insurance Corporation of India.

BSE: 540755 Sector: Financials
NSE: GICRE ISIN Code: INE481Y01014
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OPEN 127.90
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VOLUME 20908
52-Week high 152.60
52-Week low 107.60
P/E 6.25
Mkt Cap.(Rs cr) 21,676
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

General Insurance Corporation of India. (GICRE) - Auditors Report

Company auditors report

To

The Members of

General Insurance Corporation of India

Report on the Audit of Standalone Financial Statements

1. Opinion

We have audited the accompanying Standalone Financial Statements of General InsuranceCorporation of India ("the Corporation") which comprise the Balance Sheet as at31st March 2021 the Revenue Accounts of Fire Miscellaneous Marine and LifeInsurance

(Collectively known as’ Revenue Accounts’) Profit and Loss Account the CashFlow statement for the year ended and notes to the financial statements including significantaccountingpolicies and other explanatory information in which are summary of incorporatedreturns of three foreign branches whose auditors are appointed by the Corporation and onedomestic branch audited by branch auditors appointed by Comptroller and Auditor General ofIndia New Delhi.

In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid Standalone Financial

Statements give the information required in accordance with the requirements of theInsurance Act 1938 as amended by the Insurance Laws (Amendment) Act 2015 (‘theInsurance Act’) the Insurance Regulatory and Development Authority Act 1999(‘the IRDAI Act’) the Insurance Regulatory and Development Authority(Preparation of Financial Statements and Auditor’s Report of Insurance Companies)Regulations 2002 (‘the IRDAI Financial Statements Regulations) the Companies Act2013 (‘the Act’) including the

Accounting Standard specified under section 133 of the Companies Act 2013 read withRule 7 of the Companies (Accounts) Rules 2014 (‘the Accounting Standards’) tothe extent applicable and in manner so required and give a true and fair view inconformity with the accounting principles generally accepted in India as applicable to theInsurance Companies of state of affairs of the Corporation as on 31st March2021 surplus of revenue accounts of Fire Miscellaneous Marine and Life businessin caseof profit and loss account of the profit for the year ended on that date and its cashflows for the year ended on that date.

2. Basis For Opinion

We conducted our Audit in accordance with the Standards on Auditing(‘SA’s’) specified under section 143(10) of the Act and other applicableauthoritative pronouncements issued by the Institute of Chartered Accountants of India("ICAI"). Our responsibilities under those standards are further described inthe Auditors Responsibilities for the Audit of the Financial Statements section of ourreport. We are independent of the Corporation in accordance with the Code of Ethics issuedby the ICAI together with the ethical requirements that are relevant to our Audit of thefinancial statements under the provisions of the Companies act 2013 and the Rulesthereunder and we have fulfilled our other ethical responsibilities in accordance withthe Code of Ethics. We believe that the audit evidences we have obtained is sufficient andappropriate to provide a basis for our opinion.

3. Emphasis of Matter

a) We draw attention to Note No. 25 (b) of the standalone financial statementsBalances due to/from entities carrying on Insurance business including reinsurancebusinesses are subject to confirmations and/or reconciliation and as stated in the notethe consequential impact (If any) will be accounted after confirmations and/orreconciliation.Further as stated in the said note management has reversed unreconciledbalances older than three years in the current financial year.

b) We draw attention to Note No. 53 of the standalone financial results regarding theuncertainties arising out of the outbreak of COVID-19 pandemic and the assessment made bythe managementonitsbusinessandfinancialsfor the year ended March

31 2021 this assessment and the outcome of the pandemic is as made by the managementand the outcome is dependent on the circumstances as they evolve in the subsequentperiods.

Our opinion is not modified on the above matters.

4. Key Audit Matters

Key Audit Matters are those matters that in our professional judgment were of mostsignificance in our audit of the financial statements of the current period. These matterswere addressed in the context of our audit of the standalone financial statements as awhole and in forming our opinion thereon and we do not provide a separate opinion onthese matters. We have determined the matters below to be the key audit matters to becommunicated in our report.

S.No. Key Audit Matters Auditor’s response
1. Revenue Recognition: Our audit procedures on revenue recognised included:
The Corporation recognises reinsurance premium income based on the statement of accounts or closing statements received from the ceding companies. At the year end estimates are made for the accounts not received based on the Estimated Premium Income (EPI) agreed upon by both the Corporation and the Ceding Companies at the time of inception of the treaty or policy slip. Premium estimation is the differential of EPI and the booked premium for the year by the Corporation. Estimation of Income can be right only if the factors involved are incorporated in the system and extracted correctly from the system. Tested the design implementation and operating effectiveness of key controls over Revenue Recognition.
Verified Premium Estimation with the guidelines of the Corporation and have performed test of controls test of details and analytical review procedures on estimation of income.
Verified EPI from the treaty or policy slip as the case may be and verified Actual Premium booked from Statement of Accounts or Closing statements received from the Cedants of the sample cases
2. Claim Provisioning:
Insurance Claim is the major area of expense for the insurance company. Total claims incurred include paid claims Outstanding Loss Reserve (OSLR) and Claims Incurred But Not (Enough) Reported (IBN(E)R). Verified operational guidelines of the Corporation relating to claim processing have performed test of controls test of details and analytical review procedures on the outstanding claims. Verified the claim paid and provision on sample basis with payment proof and Preliminary Loss advice received from the Cedant Company and the same is further verified from the surveyor’s report.
The Provision and payment of claims was considered to be one of the areas which required significant auditor attention and was one of the matter of most significance in the standalone financial statements as the quantum involved is significant. For the claim cases which has been incurred but not reported and cases in which claim has been reported but not enough reported these cases has been captured by the actuary appointed by the Corporation. The actuarial valuation of liability in respect of Claims Incurred but Not Reported (IBNR) and those Incurred but Not Enough Reported (IBNER) as at 31st March 2021 is as certified by the Corporation’s Appointed Actuary and we had verified the amounts and the related liability based on such report.
3. Investments: Our audit procedures on Investment included the following:
The Corporation’s investments represents substantial portion of the assets as at March 31 2021 which are valued in accordance with accounting policy framed as per the extent of the regulatory guidelines. Tested the design implementation and operating effectiveness of key controls over valuation process of investments.
Valuation of actively traded equity shares and ETFs is made on the closing price of NSE. If such security is not listed/ not traded on NSE on closing day the closing price of BSE is considered. Assessed appropriateness of the valuation methodologies with reference to prudential norms of the Reserve Bank of India and IRDAI along with Corporation’s own valuation policy.
Valuation of thinly traded equity shares and unlisted shares as per policy adopted by the Corporation. All debts securities including Government securities and Redeemable Preference shares have been measured at historical cost subject to amortization of premium paid over residual period. The valuation of these investments was considered to be one of the areas which required significant auditor attention and was one of the matter of most significance in the standalone financial statements due to the materiality of the total value of investments to the financial statements. Sample checks for actively traded equity shares ETF’s debt securities Redeemable Preference shares etc. are performed by us to determine the correctness of the valuation of these investments.
For other investments tested whether the Corporation has strictly complied with the policy

5. "Information Other than the Financial Statements and Auditor’sReport Thereon"

The Corporation’s Board of Directors is responsible for the other information. Theother information comprises the information included in the Annual report but does notinclude the standalone financial statements and our auditor’s report thereon. TheAnnual report/ Board’s report is expected to be made available to us after the dateof this auditor’s report.

Our opinion on the standalone financial statements does not cover the other informationand we do not express any form of assurance conclusion thereon.

In connection with our audit of the standalone financial statements our responsibilityis to read the other information and in doing so consider whether the other informationis materially inconsistent with the standalone financial statements or our knowledgeobtained during the course of our audit or otherwise appears to be materially misstated.

If based on the work we have performed we conclude that there is a materialmisstatement of this other information we are required to communicate the matters tothose charged with governance and determine the actions under the applicable laws andregulations.

6. Responsibilities of the management and those charged with governance for thefinancial statements

The Corporation’s Board of Directors is responsible for matters as stated insection 134(5) of the Companies Act 2013 ("the act") with respect to thepreparation of these Financial Statements that give a true and fair view of the financialfinancial position performance and Cash flows of the Corporation in accordance with theInsurance Act 1938 as amended by the Insurance Laws (Amendment) Act 2015 (‘theInsurance Act’) the Insurance Regulatory and Development Authority Act 1999(‘the IRDAI Act’) the Insurance Regulatory and Development Authority(Preparation of Financial Statements and Auditor’s Report of Insurance Companies)Regulations 2002 (‘the IRDAI Financial Statements Regulations) the Companies Act2013 (‘the Act’) including the Accounting Standardspecifiedunder section 133 ofthe Companies Act 2013 read with Rule 7 of the Companies (Accounts) Rules 2014.

This responsibility also includes maintenance of adequate accounting records inaccordance with the provisions of the act for safeguarding of the assets of theCorporation and for preventing and detecting frauds and other irregularities; selectionand application of appropriate accounting policies; making judgments and estimates thatare reasonable and prudent; and design implementation and maintenance of adequateinternal financial controls that were operating effectively for ensuring the accuracy andcompleteness of the accounting records relevant to the preparation & presentation ofthe Financial Statements that give a true and fair view and are free from materialmisstatements whether due to fraud or error.

In preparing the Standalone Financial Statements management is responsible forassessing the ability of the Corporation’s to continue as Going Concern disclosingas applicable matters related to going concern and using the going concern basis ofaccounting unless management either intends to liquidate the Corporation or to ceaseoperations as has no realistic alternative but to do so.

The Board of Directors is also responsible for overseeing the Corporation’sfinancial reporting process.

7. Auditor’s Responsibilities for the Audit of the Financial Statements

Our Objective is to obtain reasonable assurance about whether the Financial Statementsas a whole are free from Material Misstatements whether due to fraud or error and toissue an auditor’s report that includes our opinion. Reasonable assurance is a highlevel of assurance but is not a guarantee that an audit conducted in accordance withSA’s will always detect a material Misstatement when it exists. Misstatements canarise from fraud or error and are considered material if individually or in theaggregate they could reasonably be expected to influence the economic decisions of userstaken on the basis of these Financial Statements.

As part of an audit in accordance with SA’s we exercise professional judgment andmaintain professional skepticism throughout the audit. We also:

Identify and assess the risks of material misstatements of the financial statementswhether due to fraud and error design and perform audit procedures responsive to thoserisks and obtain audit evidence that is sufficientand appropriate to provide a basis forour opinion. The risk of not detecting a material misstatement resulting from fraud ishigher than for one resulting from error as fraud may involve collusion forgeryintentional omissions misrepresentation or the override of internal controls.

Obtain and understanding of internal control relevant to the audit in order to designaudit procedures that are appropriate in the circumstances but not for the purpose ofexpressing an opinion on whether the Corporation has in place and adequate internalfinancial control systems over financial reporting and the operating effectiveness of suchcontrols.

Evaluate the appropriateness of accounting policies used and the reasonableness ofaccounting estimates and related disclosures made by management.

Conclude on the appropriateness of the management use of going concern basis ofaccounting and based on audit evidence obtained whether a material uncertainty existsrelated to events or conditions that may cast significant ability to continue as a goingconcern. Our conclusions are based on the audit evidence obtained up to the date of ourauditor’s report. However future events or condition may cause the Corporation tocease to continue as a going concern.

Evaluate the overall presentation structure and content of Financial Statementsincluding the disclosures and whether the Financial Statements represent the underlyingtransactions and events in a manner that achieves fair presentation.

We communicate with those charged with governance regarding among other matters theplanned scope and timing of the audit and significant audit findings including anysignificant audit.

We also provide those charged with governance with a statement that we have compliedwith the relevant ethical requirements regarding independence and to communicate withthem all relationships and other matters that may reasonably be thought to bear on ourindependence and where applicable related safeguards.

From the matters communicated with those charged with governance we determine thosematters that were of most significance in the audit of Financial Statements of the currentperiod and are therefore the Key Audit Matters. We describe these matters in ourauditor’s report unless law or regulation precludes public disclosure about thematter or when in extremely rare circumstances we determine that a matter should not becommunicated in our report because the adverse consequences of doing so would reasonablybe expected to outweigh the public interest benefits of such communication.

8. Other Matters:

a) We did not audit the Financial Statements/information of three foreign branches andone domestic branch included in the standalone financial statements of the Corporationwhose financial ` 81876283.88 Thousand (Previous Year ` 70013351 Thousand) as at March31 2021 and total revenues of ` 29915507.25 Thousand (Previous Year ` 34920488Thousand) for the year ended on that date as considered in the Standalone FinancialStatements. The financial statements/information of these branches have beenaudited/certified by the other auditors whose reports have been furnished to us and ouropinion in so far as it relates to the amounts and disclosures included in respect ofthese branches and office is based solely on the report of such auditors.

b) The actuarial valuation of liability in respect of Claims Incurred but not Reported(IBNR) and those Incurred but not Enough Reported (IBNER) as at March 31st 2021is as certified by the Corporation’s Appointed Actuaries and our opinion in so far asit relates to the amounts and disclosures related to such liability is based solely onsuch report.

c) Due to the COVID-19 pandemic restrictions imposed by the Central / State Government/ other authorities the necessary records as per our requirement were made available bythe management through digital means which we test checked and relied upon such datainformation and other supporting documents made available to us. We further relied on theadditional information explanations and other evidences provided by the management anddiscussion with them through telephone and electronic communication channels. The auditprocesses were carried out based on the remote access made available by the Corporation.

Our Report is not modified in respect of the above matters.

9. Report on Other Legal and Regulatory Requirements

1. As required by the IRDAI Financial Statements Regulations we have issued a separatecertificate dated June 29th 2021 certifying the matters specified inparagraphs 3 and 4 of Schedule C to the IRDAI Financial Statement Regulations.

2. As required by Section 143 (3) of the Companies Act 2013 and Insurance Regulatoryand Development Authority (Preparation of Financial Statements and Auditor’s Reportof Insurance Companies) Regulations 2002 and orders or direction issued by the InsuranceRegulatory and Development Authority we report that:

a) We have sought and obtained all the information and explanations which to the bestof our knowledge and belief were necessary for the purpose of our audit and have foundthem to be satisfactory.

b) In our opinion and to the best of our information and according to the explanationsgiven to usproper books of account as required by law have been kept by the Corporationso far as it appears from our examination of those books and proper returns(audited/certified) have been received from the four branches not visited by us.

c) The reports of the three foreign branches and one domestic branch on the accounts ofthe branch offices of the Corporation audited/certified by the branch auditors undersection 143(8) of the Act have been sent to us and have been properly dealt with by us inpreparing this report.

d) The Balance Sheet Revenue Accounts Profit and Loss Account and Cash Flow Statementdealt by this Report are in agreement with the books of accounts and with the returnsreceived from the branches/representative offices not visited by us.

e) The Actuarial valuation of liabilities as on March 31st 2021 is dulycertified by the appointed actuary including to the effect that the assumptions for suchvaluation are in accordance with the guidelines issued by the Institute of Actuaries ofIndia to its members and has been forwarded to IRDAI.

f) The Balance Sheet Revenue Accounts Profit and Loss Account have been drawn inaccordance with the Insurance Act 1938 IRDAI Act 1999 and the Act except for the CashFlow Statement (Refer Note 54) which is prepared under indirect methodwhereas IRDAIregulations require Cash Flow Statements to be prepared under Direct Method.

g) Investments have been valued in accordance with the provisions of the Insurance Actthe regulations and orders/directions issued by IRDAI in this regard.

h) The Accounting policies selected by the Corporation are appropriate and are inaccordance with the applicable accounting standards and with the accounting principles asprescribed in the IRDAI (Auditor’s Report) Regulations 2002 or any order ordirection issued by IRDAI in this behalf.

i) On the basis of written representations received from the directors as on 31stMarch 2021 taken on record by the board of directors none of the directors isdisqualified as on 31st March 2021 from being appointed as a director in termsof section 164(2) of the Act.

j) In our opinion the aforesaid Financial Statements comply with the AccountingStandards specified under section 133 of the Act read with rule 7 of the Companies(Accounts) Rules 2014 and Companies (Accounting Standards) Amendment Rules 2016 and alsoin conformity with the accounting principles prescribed in the IRDAI regulations.

k) With respect to the other matters to be included in the Auditor’s Report inaccordance with the requirements of section 197(16) of the Act as amended we report thatthe provisions of section 197 of the act are not applicable to the Corporation videnotification No. GSSR 463 (E) dated June 5 th 2015. Hence reporting u/s 197 (16) of theAct is not required.

l) The Corporation being an Insurance Company the Companies (Auditor’s Report)Order 2016 ("the order") as amended issued by the Central Government of Indiain terms of sub section (11) of Section 143 of the Act is not applicable.

m) With respect to the adequacy of the internal financial controls over financialreporting of the Corporation and the operating effectiveness of such controls refer toour separate report in "Annexure A".

n) As required under section 143(5) of the Companies Act 2013 based on our audit asaforesaid we enclose herewith as per Annexure "B" the directions includingthe additional directions issued by Comptroller and Auditor General of India action takenthereon and the financial impact on the accounts and the financial statements of theCorporation.

o) W ith respect to the other matters to be included in the Auditor’s Report inaccordance with Rule 11 of the Companies (Audit & Auditors) Rules 2014 in our opinionand to the best of our information and according to the explanations given to us:

i. The Corporation has disclosed the impact of pending Litigations on its financialposition in Note 47 to the Financial Statements;

ii. Provisions has been made as on March 31st 2021 in the StandaloneFinancial Statements as required under the applicable law or accounting standards formaterial foreseeable losses if any on long term contracts. There were no derivativecontracts as on March 31st 2021.

iii. There were no amounts which were required to be transferred to the InvestorEducation and Protection Fund by the Corporation.

For J Singh & Associates For D. R. Mohnot & Co
Chartered Accountants Chartered Accountants
FRN- 110266W FRN – 001388C
J Singh D. R. Mohnot
(Partner) (Partner)
M.No. 042023 M. No. 070579
UDIN: 21042023AAAAEK2269 UDIN: 21070579AAAAHE1090
Place: Mumbai Place: Jaipur
Date: 29th June 2021 Date: 29th June 2021

Annexure A to the Independent Auditors’ Report

Annexure A to the Independent Auditors’ Report of even date on the FinancialStatements of General Insurance Corporation of India

(Referred to in paragraph 9(2)(m) of our report on other legal and regulatoryRequirements forming part of the Independent Auditor’s report dated June 29th2021)

Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section143 of the Companies Act 2013 ("the Act")

We have audited the internal financial controls over financial reporting of GeneralInsurance Corporation of India ("the Corporation") as of March 31 2021 inconjunction with our audit of the Standalone Financial Statements of the Corporation forthe year ended on that date.

Management’s Responsibility for Internal Financial Controls

The Corporation’s management is responsible for establishing and maintainingInternal Financial Controls based on the internal control over financial reportingcriteria established by the Corporation considering the essential components of internalcontrol stated in the Guidance Note on Audit of Internal Financial Controls over FinancialReporting issued by the Institute of Chartered Accountants of India (‘ICAI’).These responsibilities include the design implementation and maintenance of adequateinternal financial controls that were operating effectively for ensuring the orderly andefficient conduct of its business including adherence to Corporation’s policies thesafeguarding of its assets the prevention and detection of frauds and errors theaccuracy and completeness of the accounting records and the timely preparation ofreliable financial information as required under the Companies Act 2013.

Auditors’ Responsibility

Our responsibility is to express an opinion on the Corporation’s InternalFinancial Controls over financial reporting based on our audit. We conducted our audit inaccordance with the Guidance Note on Audit of Internal Financial Controls over FinancialReporting (the "Guidance Note") and the Standards on Auditing issued by ICAIand deemed to be prescribed under section 143(10) of the Companies Act 2013 to theextent applicable to an audit of internal financial controls both applicable to an auditof Internal Financial Controls and both issued by the Institute of Chartered Accountantsof India.

Those Standards and the Guidance Note require that we comply with ethical requirementsand plan and perform the audit to obtain reasonable assurance about whether adequateInternal Financial Controls over financial reporting was established and maintained and ifsuch controls operated effectively in all material respects.

Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe Internal Financial Controls system over financial reporting and their operatingeffectiveness. Our audit of Internal Financial Controls over financial reporting includedobtaining an understanding of internal financial controls over financial reportingevaluating the design and operating effectiveness of internal control based on theassessed risk. The procedures selected depend on the auditor’s judgment includingthe assessment of the risks of material misstatement of the Financial Statements whetherdue to fraud or error. Commensurate to the size and nature of the business we believethat the audit evidence we have obtained is sufficient and appropriate to provide a basisfor our audit opinion on the Corporation’s Internal Financial Controls system overfinancial reporting.

Meaning of Internal Financial Controls over Financial Reporting

A Corporation’s Internal Financial Control over financial reporting is a processdesigned to provide reasonable assurance regarding the reliability of financial reportingand the preparation of Financial Statements for external purposes in accordance withgenerally accounting principles. A Corporation’s Internal Financial Control overfinancial reporting includes those policies and procedures that

(1) pertain to the maintenance of records that in reasonable detail accurately andfairly reflect the transactions and dispositions of the assets of the Corporation;

(2) provide reasonable assurance that transactions are recorded as necessary to permitpreparation of financial statements in accordance with generally accepted accountingprinciples and that receipts and expenditures of the Corporation are being made only inaccordance with authorization of management and directors of the Corporation; and

(3) provide reasonable assurance regarding prevention or timely detection ofunauthorised acquisition use or disposition of the Corporation’s assets that couldhave a material effect on the Financial Statements.

Inherent Limitations of Internal Financial Controls over Financial Reporting

Because of the inherent limitations of Internal Financial Controls over financialreporting including the possibility of collusion or improper management override ofcontrols material misstatements due to error or fraud may occur and not be detected.Also projections of any evaluation of the internal financial controls over financialreporting to future periods are subject to the risk that the Internal Financial Controlover financial reporting may become inadequate because of changes in conditions or thatthe degree of compliance with the policies or procedures may deteriorate.

Opinion

In our opinion commensurate with the size & nature of business the Corporationhas in all material respects an adequate Internal

Financial Controls system over financial reporting and such Internal Financial Controlsover financial reporting were operating effectively as at March 31 2021 based on theinternal control over financial reporting criteria established by the Corporationconsidering the essential components of internal control stated in the Guidance Note onAudit of Internal Financial Controls Over Financial Reporting issued by the Institute ofChartered Accountants of India.

Other Matter

The actuarial valuation of liability in respect of Claims Incurred but not Reported(IBNR) and those Incurred but not Enough Reported (IBNER) as at March 31st 2021is as certified by the Corporation’s Appointed Actuaries and has been relied upon byus as mentioned in paragraph 8 of our audit report on the standalone financial statementsfor the year ended March 31st 2021. Accordingly our opinion on the InternalFinancial Controls over financial reporting does not include reporting on the operatingeffectiveness of the management’s internal controls over the valuation and accuracyof aforesaid actuarial valuation.

For J Singh & Associates For D. R. Mohnot & Co
Chartered Accountants Chartered Accountants
FRN- 110266W FRN – 001388C
J Singh D. R. Mohnot
(Partner) (Partner)
M.No. 042023 M. No. 070579
UDIN: 21042023AAAAEK2269 UDIN: 21070579AAAAHE1090
Place: Mumbai Place: Jaipur
Date: 29th June 2021 Date: 29th June 2021

Annexure B to the Independent Auditors’ Report

(Referred to in paragraph ‘9(2)(n)’ of "Report on Other Legal andRegulatory Requirements" section of the Independent Auditors’ Report of evendate to the members of General Insurance Corporation of India on the Standalone financialstatements for the year ended March 31 2021)

With regards to the Directions issued by the Comptroller and Auditor General of Indiaunder section 143(5) of the Companies Act 2013 based on our audit we report hereunderon the action taken and the financial impact on the accounts of the Financial Statementsof the Corporation.

Sr.No. Direction under Section 143 (5) of the Companies Act 2013 Action taken and financials impact
1. Whether the Corporation has system in place to process all the accounting transactions through IT system? If yes the implications of processing of accounting transactions outside IT system on the integrity of the accounts along with the financial implications if any may be stated. The Corporation has system in place to process all the accounting transactions through IT systems except for
1. Unexpired Risk Reserve (URR): The provision of URR is calculated manually based on the data extracted from the system and then the same is entered in the IT system after verification
2. Retro Recovery Claims: It is understood that claims recovery is processed manually and the data is maintained offline. After verification it is entered in the IT system therefore there is no financial impact.
2. Whether there is any restructuring of an existing loan or cases of waiver/write-off of debts /loans/interest etc. made by a lender to the Corporation due to the Corporation’s inability to repay the loan? If yes the financial impact may be stated. Whether such cases are properly accounted for? (in case lender is a government company then its direction is also applicable for statutory auditor of the lender company). Not Applicable as the Corporation does not have any outstanding borrowed money.
3. Whether funds (grants/subsidy etc) received/receivable for specific schemes from central/ state government or its agencies were properly accounted for/ utilized as per its terms and conditions? List the cases of deviation. Not Applicable. The Corporation is a re-insurance Company and it does not receive any funds directly from State / Central Agencies for specific schemes.

With respect to the additional directions issued by Comptroller and Auditor General ofIndia under section 143 (5) of the Companies Act 2013 based on our audit we reporthereunder on the action taken and the financial impact on the accounts of the StandaloneFinancial Statements of the Corporation:

Sr. No. Additional Direction under Section 143 (5) of the Companies Act 2013 Action taken and financials impact
1. Number of titles of ownership in respect of CGS/SGS/ Bonds/ Debentures etc. available in physical/demat form and out of these number of cases which are not in agreement with the respective amounts shown in the Company’s books of accounts may be verified and discrepancy found may be suitably reported. The Central Government Securities and State Government securities balances are tallied as per the record of custodian vis a vis books of accounts of the Corporation.
Further in case of bonds/debentures/equities/preference shares no confirmations or other documentary evidence was available regarding actual custody of the following :
16 Scrip of investments in debenture of ` 6589 thousand as per books of accounts (The Corporation has fully provided for these amounts in earlier years hence no financial impact)

 

5 Scrip of investments in Preference Shares of ` 0.004 thousand as per books of accounts (Four Scrip Written down to ` 1/- and One Scrip Written Down to Zero in earlier years hence no financial impact) Since all the above have either been fully provided or written down the same has no financial impact.
Following Investments held by the Custodian of the Corporation is in excess of number vis a vis held as per the books of the Corporation.
1 Scrip of Bonds having book value of ` 1300 thousand (Fully provided by management) and one scrip of bond having book value of Nil.
1 Scrip of Preference Shares having book value of ` 0.001 thousand (Written down to ` 1)
2. Whether stop-loss limits have been prescribed in respect of investments. If yes whether or not the limit was adhered to. If not the details may be given. The Annual Investment Policy of the Corporation as approved by the Board has not prescribed any stop-loss limits in respect of the investment activity.
As explained by the management the investments of the company are of long term in nature and the Corporation has not carried out trading activity during the year under consideration.
There is no impact on the Financial Statement.
3. a) Number of Capital Gearing Reinsurance treaties and Solvency Relief Treaties entered/renewed/signed by the Corporation during the year 2020-21 a) (i) During the year under audit the Corporation has not entered/renewed/signed any Capital Gearing Reinsurance Treaties. However as on 31.03.2021 13 such treaties which were entered /signed during earlier years are yet to be expired.
b) Whether the Company has accounted premium commission claims paid claims outstanding at the end of the year claims outstanding at the beginning of the year deposit premium reserve loss reserve and Unexpired Risk Reserve of Capital Gearing Reinsurance treaties and Solvency Relief Treaties correctly as per terms and conditions of treaty agreements? If not shortfall/excess may be reported. a) (ii). IRDAI vide circular no. IRDA/F&A/CIR/MISC/ 076/03/2020 dated 28/03/2020 directed the insurers as under:
A. no insurer shall enter into any fresh Capital Gearing treaties effective from the date of Issuance of this Circular; and
c) Whether accounting policies adopted by the Corporation in respect of Capital Gearing Reinsurance treaties and Solvency Relief Treaties are appropriate and adequate? B. Insurers who are having such treaties on their books as on the date of issuance of this Circular shall take the following steps:
i. Submit Board approved Action Plan to the Authority on or before 30th June 2020 for phasing out the treaties along with timelines such that it complies with the Solvency Stipulations.
The plan of action shall also include assessment of requirement of capital infusion and sources of funds for the capital infusion so required due to prospective Closure of these Capital Gearing treaties.
The Corporation however has not complied with the direction of IRDAI as aforesaid and given representation that these directions are not applicable to the Corporation being Re- insurer. The Corporation has also sought clarification from
IRDAI in this regard however as on date no clarification on the matter has been received from the Authority.
In the absence of any specific IRDAI Guidelines on accounting of such treaties the accounting is done by the Corporation on the basis of the accounting policy adopted by the Corporation for other treaties except that no Unexpired Risk Reserve is created on such treaties in view of the fact that the loss to the extent of loss-ratio specified in each treaty is already provided for during the year. There is no impact on the financial statements.

 

For J Singh & Associates For D. R. Mohnot & Co
Chartered Accountants Chartered Accountants
FRN- 110266W FRN – 001388C
J Singh D. R. Mohnot
(Partner) (Partner)
M.No. 042023 M. No. 070579
UDIN: 21042023AAAAEK2269 UDIN: 21070579AAAAHE1090
Place: Mumbai Place: Jaipur
Date: 29th June 2021 Date: 29th June 2021

INDEPENDENT AUDITOR’S CERTIFICATE

To

Board of Directors

General Insurance Corporation of India

"Suraksha" 170 J Tata Road

Churchgate Mumbai

Dear Sirs

(Referred to in paragraph 1in Other Legal and Regulatory Requirements Section formingpart of the Independent Auditors’ Report dated June 29th 2021)

This certificate is issued for compliance with the provisions of paragraphs 3 and 4 ofSchedule C of the Insurance Regulatory and Development Authority (Preparation of FinancialStatements and Auditor’s Report of Insurance Companies) Regulations 2002 (the"Regulations") read with regulation 3 of the Regulations.

MANAGEMENT’S RESPONSIBILITY

The Corporation’s Board of Directors is responsible for complying with theprovisions of The Insurance Act 1938 (amended by the Insurance Laws (Amendment) Act 2015)(the "Insurance Act") the Insurance Regulatory and Development Authority Act1999 (the "IRDA Act") the Insurance Regulatory and Development Authority(Preparation of Financial Statements and Auditor’s Report of Insurance Companies)Regulations 2002 (the "IRDA Financial Statements Regulations")orders/directions issued by the Insurance Regulatory and Development Authority of India(the "IRDAI") which includes the preparation of the Management Report. Thisincludes collecting collating and validating data and designing implementing andmonitoring of internal controls suitable for ensuring compliance as aforesaid.

AUDITORS’ RESPONSIBILITY

Pursuant to the requirements it is our responsibility to obtain reasonable assuranceand form an opinion based on our audit and examination of books and records as to whetherthe Corporation has complied with the matters contained in paragraphs 3 and 4 of ScheduleC of the Regulations read with regulation 3 of Regulations.

We conducted our examination in accordance with the Guidance Note on Reports Certificatesfor Special Purposes (Revised 2016) (the ‘Guidance Note’) issued by theInstitute of Chartered Accountants of India (‘ICAI’).

The Guidance Note requires that we comply with the independence and other ethicalrequirements of the Code of ethics issued by the ICAI. We have complied with the relevantapplicable requirements of the Standard on Quality Control (‘SQC’) 1 QualityControl for Firms that Perform Audits and Reviews of Historical Financial Information andOther Assurance and Related Services engagements.

OPINION

In accordance with information and explanations given to us and to the best of ourknowledge and belief and based on our examination of the books of account and otherrecords maintained by the Corporation for the year ended March 31 2021 we certify that:

1. We have reviewed the Management Report attached to the financial statements for yearended March 31 2021 and on the basis of our review there is no apparent mistake ormaterial inconsistencies with the Financial Statements;

2. Based on management representations and compliance certificates officers of theCorporationsubmittedtotheBoard Directorsbythe charged with compliance and the same beingnoted by the Board nothing has come to our attention that causes us to believe that theCorporation has not complied with the terms and conditions of registration as stipulatedby the IRDAI;

3. We have relied on managementcertificatefor Cash Balances as on March 31 2021 due tocertain Covid-19 related restrictions. The securities relating to the Corporation loansand investments as at March 31 2021 have been verified on the basis of confirmationsreceived from the Custodian and/ or Depository Participants appointed by the Corporationas the case may be subject to paragraph mentioned below:

No confirmation were available from Custodian in respect of Investment in Debentures& Preference Shares of` 6589 thousand (16 Scrips) ` 0.004 thousands (Four ScripWritten down to ` 1/- and One Scrip Written Down to Zero in earlier years) respectivelyBonds & Preference Shares of ` 1300 thousand and ` 0.001 thousand (1 scrip writtendown to `1) respectively actually held by the Custodian of the Corporation is in excessvis a vis books of the Corporation.

Further the term loans are subject to confirmations/reconciliation.

4. The Corporation is not a trustee of any trust however the Corporation is acting asmanager of Terrorism and Nuclear Pool.

5. No part of the assets of the Policyholders’ Funds has been directly orindirectly applied in contravention to the provisions of the Insurance Act relating to theapplication and investments of the Policyholders’ Funds.

Restriction to use

This certificate is addressed to and provided to the Board of Directors of theCorporation solely for inclusion in the Annual accounts of the Corporation as per theRegulations and should not be used by any other person or for any other purpose. We haveno responsibility to update this certificate for events and circumstances occurring afterthe date of this certificate. Accordingly we do not accept or assume any liability or anyduty of care for any other purpose or to any other person to whom this report is shown orinto whose hands it may come without our prior consent in writing.

For J Singh & Associates For D. R. Mohnot & Co
Chartered Accountants Chartered Accountants
FRN- 110266W FRN – 001388C
J Singh D. R. Mohnot
(Partner) (Partner)
M.No. 042023 M. No. 070579
UDIN: 21042023AAAAEK2269 UDIN: 21070579AAAAHE1090
Place: Mumbai Place: Jaipur
Date: 29th June 2021 Date: 29th June 2021

Comments of the Comptroller and Auditor General of India

COMMENTS OF THE COMPTROLLER AND AUDITOR GENERAL OF INDIA UNDER SECTION 143(6)(b) OF THECOMPANIES ACT 2013 ON THE FINANCIAL STATEMENTS OF GENERAL INSURANCE CORPORATION OF INDIAFOR THE YEAR ENDED 31 MARCH 2021

The preparation of financial statements of GENERAL INSURANCE CORPORATION OF INDIA forthe year ended 31 March 2021 in accordance with the financial reporting frameworkprescribed under the Insurance Act 1938 read with Insurance Regulatory and DevelopmentAuthority (Preparation of Financial Statements and Auditor’s Report of the InsuranceCompanies) Regulations 2002 and the Companies Act 2013 (Act) is the responsibility ofthe management of the company. The statutory auditors appointed by the Comptroller andAuditor General of India under section 139(5) of the Act are responsible for expressingopinion on the financial statements under section 143 of the Act based on independentaudit in accordance with the standards on auditing prescribed under section 143(10) of theAct. This is stated to have been done by them vide their Audit Report dated 29 June 2021.

I on behalf of the Comptroller and Auditor General of India have conducted asupplementary audit of the financial statements of GENERAL INSURANCE CORPORATION OF INDIAfor the year ended 31 March 2021 under section 143(6)(a) of the Act. This supplementaryaudit has been carried out independently without access to the working papers of thestatutory auditors and is limited primarily to inquiries of the statutory auditors andcompany personnel and a selective examination of some of the accounting records. On thebasis of my supplementary audit nothing significant has come to my or supplement tostatutory auditors’ report under section 143(6)(b) of the Act.

For and on behalf of the

Comptroller & Auditor General of India

(P. V. Hari Krishna)

Principal Director of Audit (Shipping) Mumbai

Place : Mumbai

Date : 20.09.2021

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