MUMBAI - General Insurance Corporation of India (GIC Re) reported a mixed financial performance for the half-year ending September 30, with a notable decrease in net profit alongside a modest increase in gross premium income. The state-owned reinsurance company faced challenges that reflected in its bottom line, despite some areas of growth.
The insurer's net profit fell by 8.3% to ₹23,368.7 million ($280.5 million), while its gross premium income saw a slight uptick of 2.9% year-over-year (YoY), reaching ₹196,798.5 million. This growth in premiums was overshadowed by an expanded underwriting loss of ₹30,290.4 million, a significant surge of 78.6% compared to the previous year.
GIC Re's financial health was further pressured by a rise in the combined ratio to 116.98%, indicating that the company paid out more in claims and expenses than it earned from premiums. The combined ratio is a key measure of profitability in the insurance industry, with figures above 100% signifying an underwriting loss.
Despite these setbacks, there were positive signs in other areas of GIC Re's business. The company's investment income provided a silver lining, growing by 9% YoY to ₹55,559.1 million. Additionally, the firm's solvency ratio improved significantly, jumping from 225% to a robust 282%. This metric is crucial as it indicates an insurer's ability to meet its long-term debt obligations and other potential claims.
The company also reported growth in net premiums, which increased to ₹181,979.8 million from ₹178,487.2 million in the previous year. However, this was countered by a decline in earned premium, which fell to ₹185,906.7 million from last year's ₹195,001.4 million.
Pre-tax profit experienced a downturn as well, dropping to ₹27,827.8 million from ₹34,500.8 million reported for the same period last year.
GIC Re's latest financial results highlight the challenges faced by insurance companies in balancing premium growth with claim settlements and managing underwriting risks effectively. The insurer's improved investment income and solvency ratio are positive indicators that may provide some reassurance to stakeholders about the company's financial resilience in a challenging market environment.
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