IL&FS provisions hit GIC Re profit

Mumbai: Provisioning on IL&FS account and claims from agri-insurance has hit the earnings of state owned General Insurance Corporation of India (GIC Re) that reported 86 per cent drop in year on year net profit for the quarter ended June 30, 2019 to Rs 109 crore. The net profit was Rs 771.42 crore in the same period of last year. GIC Re is the country's largest reinsurer.

M. Shashikala, Chief Financial Officer, GIC Re said, "Our exposure to IL&FS was Rs 788 crore of which we had provided 50 per cent in the March quarter and the remaining 50 per cent we have provided in the June quarter. Secondly, the rainfall had been deficient in June and we felt it could impact the Kharif crops so we made provisions in anticipation of agri losses but now the monsoon has revived and these provisions could be released in the subsequent quarters. We have also made provisions on motor insurance. So this is strengthening of our reserves which is a good thing and we expect this strain to ease in the coming quarters."

The incurred claims in June quarter was Rs 14,700 crore. According to an official, reinsurer has made provisioning of Rs 6,000 crore towards agri & motor claims that could arise in the future.

The growth in gross premium income of the company was 10.8 per cent with premium of Rs 20,813 crore for the June quarter of 2019-20 from Rs 18,791.45 crore in the corresponding quarter of previous year. The investment income increased by 26.24 per cent with income of Rs 1,401.90 crore for the quarter ended June 30 as compared to Rs 1,110.53 crore for the corresponding quarter of previous year.

Underwriting loss (inclusive of exchange gain) jumped nearly nine times to Rs 854.37 crore in June quarter as against Rs 96.37 crore in corresponding quarter of previous year. The Combined Ratio is 102.6 per cent for the June quarter as compared to 99.9 per cent in the year ago period. The total assets increased by 6.31 per cent to Rs 1.28 lakh crore in June quarter.