India’s largest reinsurer General Insurance Corporation (GIC Re) recorded a pre-tax loss of Rs 811.22 crore in Q1FY21, compared to a pre-tax profit of Rs 138.90 crore in Q1FY20. Its net loss for the same period stood at Rs 557.46 crore, compared to a net profit of Rs 108.59 crore.
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 in the same period last financial year. While it recorded a 25.3 per cent growth in the fire insurance segment in Q1FY21, with premiums to the tune of Rs 3,925.92 crore compared to Rs 3,134.14 crore in Q1FY20, however, other segments such as motor, health, agriculture, and marine segments saw contraction in premiums.
Its investment income for the reporting quarter dropped 18.5 per cent to Rs 1,142.83 crore in Q1FY21, compared to Rs 1,401.90 crore in the same period last financial year.
“Global scenario for Insurance Industry for the FY 2020-21 has shown weak trends due to Covid-19 situation. GIC Re although has maintained its prominent position in Indian insurance sector, there has been reduction in business for the Q1 2020-21 partially due to strategic reduction of risk acceptance and partially due to reduction of overall direct premium in India. GIC Re however expects to see rebound in business during the rest of the year”, the company said in a statement.
Its underwriting losses expanded to Rs 1,771.35 crore in Q1FY21, compared to Rs 854. 37 crore in Q1FY20. It reported a combined ratio of 112.16 per cent in Q1FY21, as compared to 102.63 per cent in Q1FY20. Adjusted combined ratio of the company stood at 105.88 per cent for the quarter ended June 2020 as compared to 97.24 per cent for quarter ended June 2019.
The combined ratio measures the money flowing out of an insurance company in the form of dividends, expenses, and losses. Losses indicate the insurer's discipline in underwriting policies. Typically, a ratio below 100 per cent indicates that the company 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 from premiums.
GIC Re’s solvency ratio is 1.52, against the regulatory requirement of 1.5.
Its consolidated gross premium income, which includes it’s overseas business, was Rs 15,982.75 crore in Q1FY21, compared to Rs 21,110.36 crore in Q1FY20 and consolidated net loss for Q1FY21 stood at Rs 497.02 crore compared to a net profit of Rs 192.07.