General Insurance Corporation of India (GIC Re) has pushed its long-pursued 50:50 business mix between domestic and international business into the longer term, as abundant reinsurance capacity and softer pricing in global markets make it harder to scale up its overseas business profitably.
“50/50 that we talk about domestic versus international is fairly a long-term goal,” Chairman and Managing Director Hitesh Rameshchandra Joshi told analysts during the first-quarter earnings call. He added that the domestic market continues to be the growth driver globally in comparison to the other global markets.
The country’s largest reinsurer has tempered its ambition to 60:40 domestic-international mix as a medium-term target. “We are presently targeting with a medium-term in view is 60/40,” Joshi said, but even achieving that “will be a tough shot” if the domestic market continues to outgrow global markets.
The share of international business has been shrinking, falling from 31% of gross premium in FY24 to 25% in the following two financial years. In the June quarter, international business contributed only 14% of GIC Re’s ₹13,475 crore gross premium.
On questions on when GIC Re could return to the ₹18,000 crore of foreign premium it once had, Joshi said it could take three to four years due to softening global reinsurance market as insurers rushing to cover the same risks at lower premiums.
“Maybe not in two years, maybe three or four years. While we have the broader targets and goals and direction, we are not really keen on pursuing those targets at the cost of overall risk-return optimisation,” he said.
Joshi also acknowledged that the domestic reinsurance market is facing pricing pressure, with premiums declining sharply in the fire and commercial insurance segments and excess capacity from foreign reinsurers’ branches in India adding to competition.
“Given that the global capacity is ample and fairly surplus, the aggressive stance of the reinsurer is all around.” Joshi said, adding that almost all including almost all players have displayed competitive behavior have displayed competitive behavior.
Chief Underwriting Officer Sanjay Mokashi said the Insurance Regulatory and Development Authority of India’s recent direction that reinsurers cannot offer discounts as high as 99% to the benchmark rate was only a guidance, with its impact likely to be visible over the next two to three quarters.
GIC Re reported a profit after tax of ₹1,744 crore for the first quarter of FY27, against ₹2,531 crore in the same quarter last year. Its domestic combined ratio stood at 107%, compared with 95% for its international business, indicating significantly better underwriting performance in overseas markets.
The company spent ₹95 on claims, losses and operating expenses for every ₹100 of premium earned in its international business, while the corresponding figure for its domestic business was ₹107. Mokashi attributed the improvement in the international combined ratio to corrective measures in motor insurance contracts, streamlining of its aviation portfolio and closer scrutiny of the overseas cargo portfolio as GIC Re seeks to grow its international business profitably.
“We would like to have a combined ratio target for domestic books at something like 103 and the foreign book at 95 in line with the global markets. So that is what we should be targeting,” Joshi said.