M Saraswathy Moneycontrol News
State-owned reinsurance company General Insurance Corporation of India (GIC Re) which saw an impact on its financials due to the losses from the property and agriculture segments is expecting better growth prospects in FY19. In an interaction with Moneycontrol, Alice Vaidyan, CMD, GIC Re discussed the company’s performance and way forward.
Excerpts:
Q: There was a drop in Q4 profits. What was the reason?
A: This was a bad year for entire reinsurance world due to the hurricanes in the US and the Caribbean alongside Mexican earthquake and California wildfires. This includes all major global reinsurers. GIC Re cannot be an exception in a bad market.
However, if you look at the full financial year, we saw a record growth of 24.5 percent in gross premium at Rs 41,799.4 crore. The profit after tax also rose to Rs 3,233.59 crore in FY18. Further, we are also giving a dividend of 270 percent and a 1:1 bonus.
Q: What led to the increase in underwriting losses in the agriculture segment?
A: We have taken a hit in the property segment as well as the agriculture segment. In the agriculture segment, while losses didn’t develop in the first year of the scheme (Fasal Bima Yojana) but now they have come in. his year, losses have come in.
We have reserving for future claims as well and not just for past claims. So, we made provisions for that on your books as well. This is reflecting as higher losses.
Q: Does the domestic market look viable with the current pricing structure?
A: We have improved in the domestic market where our combined ratio stood at 96 percent. This has been done through our pricing power in the market and also because we are a dominant player in India. The new health scheme (National Health Protection Scheme) will be value accretive and will support that.
While domestic business has become viable, we are hoping that the international business will also see an upward positive trend in FY19. We have also started operations as a Lloyds syndicate from April 1.
Q: The insurance regulator (IRDAI) will review reinsurance regulations including the order of preference in getting contracts. Will that impact your business?
A: The order of preference only means we will get to see all the business in the market. Rightfully so. Why should a business go out of the market? Only after exhausting the Indian market should the business go out of the country.
While changes in the regulations may have some impact, we are hoping the reinsurance rules are in favour of GIC Re.
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