GIC Net Down 10% In 2002-03

Mumbai, Sept 22: | Updated: Sep 23 2003, 05:30am hrs
Despite having an almost higher growth of 30 per cent rise in net premium, the net profit of the official reinsurer, General Insurance Corporation (GIC) has fallen by almost 10 per cent due to the decline in the interest rate in the system and larger claim records in 2002-03.

GICs investment income from an investment of over Rs 8,000 crore has nosedived to Rs 578 crore in 2002-03 from Rs 668 crore recorded in 2001-02. Its total asset has crossed over Rs 11,500 crore in 2002-03.

In Tie-up With LIC For Reinsurance Profit-sharing
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Mumbai, Sept 22: In a unique arrangement, the GIC has worked out a profit sharing deal with LIC for the reinsurance business between the two.
We will reinsure the risk business of LIC and the profit out of this at the end of the year will be shared by both the companies, said a senior GIC official.
However, GIC does not have this profit-sharing arrangement with general insurance companies. The Irda has mandated that 10 per cent of the domestic life insurance business has be reinsured by the GIC while for general insurance companies, the mandatory reinsurance with GIC is pegged at 20 per cent.

GIC has recorded a net profit of Rs 260 crore in 2002-03 as against Rs 306 crore in 2001-02. Its net premium during the period is pegged at Rs 3,186 crore as against Rs 2,438 crore in 2001-02. Its incurred claim during the period is Rs 2,744 crore as against Rs 2,295 crore in 2001-02.

It has opted for a higher provisioning of Rs 114 (Rs 112 crore) in 2002-03. GIC, which is considered as a leading reinsurer in Afro-Asian region, is targeting a Rs 3,400 crore of premium during the current fiscal. It is providing adequate vertical capacity to the Indian companies from whom it receives 20 per cent of reinsurance business to cover large Indian risks in fire and engineering and marine. At present, we are trying to develop more capacity in liability class, said a top GIC official. The terrorism pool of the domestic general insurance industry with a total current corpus of Rs 180 crore managed by GIC has done extremely well and has provided the needed capacity to the Indian market at a time when it was most needed while most of the companies in the rest of the world are finding it difficult to provide this cover. The outgo from this pool has been to the tune of only Rs 12 crore during 2002-03.

GIC believes that two years after 9/11, there are signs of softening and expects that in 2004 renewals, barring unforeseen events, there would again be a huge capacity chasing premiums and insurance companies with good loss records may be able to purchase their protection at a reasonable cost. The official reinsurer of the country with A (excellent) rating from AM Best which is functioning as an exclusive reinsurer for last two years is a leader for the reinsurance programmes of several insurance companies in neighbouring SAARC countries as also insurers in south-East Asia, the middle-East and Africa.

It has opened representative office in UK and Russia also has associate companies in Singapore and Kenya.