An agent selling insurance products to customers. Photographer: Brendon Thorne/Bloomberg.

GIC Re’s Earned Premium Jumps 50% On Motor, Health Profits

India’s largest reinsurer General Insurance Corporation of India Ltd.’s net premium earned rose on the back of profits from motor and health businesses.

Earned premium rose 50 percent on a yearly basis in the quarter ended December to Rs 8,558 crore, it said in an exchange filing. The company cut costs across verticals to bring down its overall claims ratio by 10 percentage points.

The reinsurer’s third-largest business — agriculture— recorded a higher underwriting loss of Rs 2,173 crore compared with Rs 2,034 crore in the year-ago quarter. That pushed up the claims paid by 61 percent to Rs 6,005 crore. GIC Re reinsures half the crop business in the country.

There were no agriculture claims in the first two quarters, said Alice G Vaidyan, chairman and managing director, at the earnings press conference. The reinsurer received claims for the kharif season in the third quarter, she said. “By the end of the year, that should balance out.”

Outstanding claims reserves in the crop segment rose more than fourfold to Rs 12,072 crore. “We are very conservative with our reserves in the agriculture. In the next quarter, the reserves will take care of the claims,” Vaidyan told BloombergQuint in an interview.

Losses due to natural disasters such as Harvey, Irma, Maria hurricanes in the U.S., earthquakes in Mexico and fires in California also contributed to the rise in claims paid by the company. For the nine months ended December, it paid around Rs 1,900 crore worth of catastrophe claims. It paid Rs 980 crore crop claims during the period.

Underwriting losses were high from all the three government-run insurance schemes — Pradhan Mantri Suraksha Bima Yojana (accident), Pradhan Mantri Fasal Bima Yojana (crop) and Pradhan Mantri Jeevan Jyoti Bima Yojana (life).

“There have been requests from the companies — both from life and non-life—that these should be reviewed for rate corrections given that these portfolios have not done too well,” said Vaidyan. “It’s right time for a review.”

Finance Minister Arun Jaitley, in the budget for 2018-19, announced the National Health Protection Scheme to cover 10 crore families for Rs 5 lakh each. Vaidyan said that the actuarial price based on risk assessment will play a big role in the success of the scheme.

Other Highlights

  • Profit after tax stood at Rs 672 crore in the quarter ended December against a loss of Rs 401 crore in the year-ago period.
  • Investment income rose 35 percent to Rs 1,196 crore.
  • Underwriting losses narrowed to Rs 419 crore from Rs 1,402 crore.
  • Gross premium written grew 8 percent to Rs 8,870 crore.
  • Net premium written, after deduction of reinsurance premium, fell 2 percent to Rs 7,477 crore.
  • Incurred claims jumped 34 percent to Rs 7,704 crore. The incurred claims ratio to earned premium fell 10 percentage points to 90 percent.
  • Combined ratio improved to 105 percent versus 119 percent.
  • Foreign exchange losses stood at Rs 126 crore compared with a profit of Rs 71 crore.
  • Solvency margin dropped to 185 percent versus 221 percent.