Q4 will have maximum foreign reinsurance premium treaty renewals: Alice G Vaidyan, GIC

Talking to ET Now, Alice G Vaidyan, Chairman & MD, GIC, says going forward, GIC will show higher solvency level.

Edited excerpts:


How has GIC been performing?

In insurance, we normally look at the figures up to a quarter or 6 months, that is two quarters. The system of looking on a quarter-to-quarter basis is something we will have to get used to going forward.

If you are looking at GIC’s performance on a half yearly basis, in six months, we have shown very good growth of Rs 24000 crore over Rs 16,000 crore of last year. It is around 51.5% growth in premium income. We are talking about an increase in PAT of almost 89.3% -- Rs 1809 crore over around Rs 956 crore of last half year. Even on return on equity, you see that there is a 60.6% increase as we are now showing an ROE of 19.2%.

Compared to all the parameters, it is customary to show figures up to a particular quarter because in insurance many segments are actually seasonal. If you are talking of agriculture, you have the premiums either coming in the first and second quarter or on the third quarter.

The fourth quarter will not have any premiums from agriculture. If you look at my foreign reinsurance book, we will have premiums coming in for the January renewals which will mean the last quarter will have the maximum of foreign reinsurance premium treaty renewals. It is quite seasonal and going forward we should be able to look at a quarter-to-quarter assessment.

If you could throw some light on the solvency ratio, it is also to primarily do with the agri claims which have come in. How do you see this because clearly there is a downfall when it comes to solvency ratios?

You can call it a downfall because the regulator has mandated a solvency of 1.5%. Anything close to that would mean that I am effectively utilising my capital. Anything around 2% or up should you give comfort. Ours has come down to 1.7% that is because we are supporting the agricultural insurance growth in the market, not only in crop insurance but across all segments. Going forward, we have raised capital for this. It is also to augment the growth in the market and you will see stable solvency levels of around two going forward.

Do you mean to say that Q3 and perhaps this fiscal you are confident of maintaining solvency?

You will see higher solvency levels.

If you could throw some light on the combined ratio because that is also one number which clearly everyone would look at when it comes to insurance companies. How do you see where it stands now and how do you see that getting improved in the coming quarters?

The combined ratio as far as insurance companies is concerned, I do not think it is a metrics which is really understood by the market. I really have to say that combined ratio has improved because it is expected to be within 100 for a company and the investment income should not be actually subsidising our operations. From 99.7% in last March, it has improved to 99.4%. Last year, it was 99.1% but then we had big international claims also from cyclones Harvey, Irma and Maria in this quarter as well. Overall, we are very satisfied that if we are able to maintain combined ratio within 100, especially for a quarter where major reinsurers have taken a hit on their books, it is a matter of satisfaction for us.

You are on record and everyone is keenly watching the Lloyd Syndicate that you have been talking about. Do we see that getting fructified and operational this quarter or how do you see it spilling over to Q4?

Yes, I would not say this quarter but before the end of this fiscal year we plan to put the Lloyd Syndicate in place which will actually give a real boost to our international operations and our foreign book of business.

We all know how crucial the agri insurance play for the insurance sector as a whole is and particularly big players like you. How do you see that pie going forward and clearly what does that mean for the overall mix of your premium incomes in this fiscal?

Agriculture has now come to be the biggest component of my book but going forward, for a reinsurer now that agriculture growth has actually stabilised, it could be good.