General Insurance Corporation of India's Q2FY19 standalone net profit declines 63.79% yoy to Rs513.84cr

The company’s standalone NII stood at Rs11,009.07cr, up 13.41% yoy but down 24.51% qoq.

Nov 13, 2018 10:11 IST India Infoline Research Team

General Insurance Corporation of India Q2FY19

Standalone Results Q2FY19: (Rs. in cr)

Q2FY19 YoY (%)
Net Premium Income 11,009.07 13.4
Net Profit (adjusted) 513.84 [63.8]

GIC Re's gross written premium for Q2FY19 increased by 15.5% yoy to Rs8,325.9cr. The net earned premium increased by 13.4% yoy to Rs11,009.1cr in Q2FY19. It reported an underwriting loss of Rs2,264.9cr as against Rs703.7cr in Q2FY18. The net commission increased by 83% yoy to Rs1,968.5cr in Q2FY19. The incurred claims (claims paid and change in outstanding claims) increased by 42.8% yoy to Rs11,246.8cr. The company's net profit after tax for Q2FY19 came in at Rs513.8cr, down 63.8% yoy.

• Net income from investments for policyholders increased by 67.3% yoy to Rs1,607.6cr in Q2FY19.
• Solvency ratio as on September 30, 2018 stood at 173% as against 172% as on March 31, 2018.
• Combined ratio for Q2FY19 deteriorated to 128.28% as against 99.41% in Q2FY18. For the period H1FY19, combined ratio stood at 110.30% vs 99.41% in H1FY18.
• Net worth of the company (including fair value change) increased by 3.6% yoy to Rs51,266.29cr as on September 30, 2018.
• The segmental performance of the company for significant segment is as follows:
Significant Segments Net Premium (Rs in Cr) Operating P&L (Rs in Cr)
Q2FY19 Q2FY18 Q2FY19 Q2FY18
Fire 2,449.82 1,080.38 (444.47) (725.53)
Motor 2,403.04 1,801.85 2.30 188.54
Health 1,178.12 1,227.96 (319.50) (69.20)
Agriculture 599.94 715.61 584.21 1,722.38
Aviation 212.28 117.74 (299.33) (25.69)

Conference call highlights:
• GIC Re has become 10th largest reinsurance player globally in terms of gross written premium.
• Kerala Floods led to total loss of Rs850cr and net loss of Rs250cr (after the protection) during the quarter.
• The company has created provisions towards other risk losses arising from BPCL, NTPC and Nirma.
• GIC Re focuses to maintain combined ratio below 100% during FY19.
• There has been de-growth under the health portfolio due to exit from loss making treaties under foreign health business.
• GIC has a debt exposure of ~Rs1,152cr under IL&FS.
• It does not have exposure towards California fires occurred in North America. As a result, the company is protected from this catastrophic event.
• GIC Re is amongst top five aviation reinsurance players in the world. The company registered losses under this segment due to various accidents and incidents in aviation sector globally during the quarter.
• Company executed major selling of equity investments in August when market was at the peak levels. As a result of this, the investment income reported by the company is healthy.
• Combined ratio under agriculture segment stood at 98% (H1FY19).
• Catastrophic losses amounted to Rs2,000cr during the quarter (losses plus reserving).
• Combined ratio in domestic business was at 102% whereas in international business it was at 138% during H1FY19.

Technical View:

General Insurance Corporation of India is currently trading at Rs. 320.20, down by 5.05 points or 1.55% from its previous closing of Rs. 325.25 on the BSE.
The scrip opened at Rs. 323 and has touched a high and low of Rs. 326 and Rs. 316 respectively. So far 68,113 (NSE+BSE) shares were traded on the counter. The stock is currently trading above its 200 DMA.

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