GIC Re posts Rs 2,490-cr net loss last fiscal

The General Insurance Corporation, India’s sole re-insurer, has posted a net loss of Rs 2,490 crore in the fiscal ended March 2012, the first ever in its 40-year history. Gross premium of the corporation grew 16 per cent to Rs 13,618 crore. Thirty-nine per cent of the income was from foreign markets.

The staggeringly high loss was the result of exposures to a number of catastrophic events abroad (earthquake in Japan, floods in Australia and Thailand, and so on).

The motor-pool loss in the domestic market was also a significant contributor. This segment contributed about Rs 811 crore to the losses. Although regulations permit the corporation to write off the losses over the next two years, the corporation has chosen to absorb the entire loss this year itself.

GIC’s Chairman and Managing Director, Mr A. K. Roy, said: “The GIC is strong enough to withstand the loss. We do not have any problems of liquidity or capitalisation. We will bounce back soon.” He outlined some corrective steps being taken. The corporation will reduce the volume of ‘retrocession’ business — that is, of insuring other global re-insurers. The losses suffered during last year were mainly due to this business, Mr Roy said.

GIC, which currently enjoys an A- (Excellent) rating from A. M. Best, expects to retain its rating in the current fiscal despite the huge loss.

 

 

N. S. Vageesh
http://www.thehindubusinessline.com/industry-and-economy/banking/article3493312.ece