GIC Re turns around financial performance in FY2021

General Insurance Corporation of India (GIC Re) yesterday announced it posted a consolidated net profit of INR199.16bn ($268.25m) for the financial year ended 31 March 2021 (FY21).

The state-owned reinsurer had posted a loss of INR1.86bn in FY20. Gross premium collected in FY21 fell by 7.1% to INR470.14bn in FY21 from INR510.30bn in the previous financial year, while the net premium also declined, reported Press Trust of India.

Incurred claims declined by 14.4% to INR368.53bn in FY21. The incurred claims ratio improved to 92.4% as of 31 March 2021 from 97.5% 12 months previously. The underwriting loss narrowed to INR54.88bn in FY21 from INR63.67bn in FY20.

Investment income jumped by 24% to INR88.2bn for FY21 as compared to the previous financial year's INR71.25bn. The solvency ratio improved to 1.74 as of 31 March this year, from 1.53 as of 31 March 2020.

The general insurer has not recommended any dividend for FY21.

Outlook

Despite its sterling financial performance in FY21, GIC Re says that the COVID-19 pandemic has created "significant uncertainties" on the growth front. There are concerns over the pandemic's impact on business and economic growth and its resultant impact on premium volume, particularly from small and medium-sized companies.

GIC Re said, "There could be some shrinkage of purchase of insurance with the potential for a cascading effect on reinsurance. "The specialty classes of business such as event cancellation, travel, credit, surety, mortgage, agriculture, directors and officers, and business interruption are expected to be adversely affected." said.

From an operational perspective, business could continue essentially through work from home across the globe by the insurers, intermediaries and reinsurers, the statement said. Global economic growth is a key driver for insurance markets that feed into the reinsurance sector, it said.

From an Indian perspective, the reinsurer said that as the insurers get listed and the market consolidates against a backdrop of declining interest rates, pricing discipline in the market can be expected to strengthen in the medium to long term.

Source: Asia Insurance Review