General Insurance Corporation of India Management Discussions

ECONOMIC OVERVIEW

Global Economy

The global economy entered FY2025-26 navigating a more complex and uneven landscape relative to the preceding year. Following an expansion of 3.3% in 2024, global growth moderated to approximately 3.2% in 2025 and is projected to remain broadly stable in the range of 3.1-3.3% through 2026, reflecting a phase of steady yet subdued expansion. While overall growth has demonstrated resilience, it remains below pre-pandemic averages, reflecting the cumulative impact of tighter financial conditions, policy normalization, and evolving trade dynamics. This stability has been supported by continued investment in technology, fiscal support in select economies, and broadly accommodative financial conditions.

However, the global outlook remains characterised by increasing divergence across regions. Trade policy uncertainties, particularly those arising from tariff actions earlier in 2025, have weighed on activity and moderated growth expectations. At the same time, inflationary trends have eased but remain uneven across geographies, with relatively greater persistence in certain advanced economies.

Among advanced economies, the United States has exhibited resilient near-term momentum, supported by fiscal expansion and front-loaded activity, although growth is expected to moderate as tighter financial conditions and waning fiscal support begin to weigh on demand. The Eurozone continues to face structural constraints, with growth remaining subdued, reflecting weak industrial activity, persistent services inflation, and muted credit demand.

China remains a key contributor to global growth, although its trajectory is expected to moderate amid ongoing real estate sector challenges, softer investor sentiment, and a gradual transition toward a more consumption-led growth model. Emerging markets and developing economies continue to account for a significant share of global growth, supported by resilient domestic demand, infrastructure investment, and increasing digital adoption.

Notwithstanding the baseline stability, downside risks remain elevated. Geopolitical tensions, evolving trade dynamics, and high global debt levels continue to pose structural vulnerabilities, with the potential to disrupt trade flows, supply chains, and investment activity.

In this environment, policymakers face the ongoing challenge of balancing disinflation with growth support. Central banks have maintained a cautious stance, as core inflation remains above target in several jurisdictions despite moderation in headline levels. Sustained progress will depend on coordinated, data-driven policymaking, credible fiscal frameworks, and structural reforms aimed at fostering long-term, inclusive growth.

Indian Economy

Against this backdrop, Indias economy delivered a strong and broad-based performance in FY2025-26. Real GDP growth accelerated meaningfully over the year, supported by robust private consumption, front-loaded government capital expenditure, a favourable monsoon, and policy interventions such as GST rate rationalisation. Growth expectations were revised upward through the year, reflecting sustained underlying momentum across key sectors.

The macroeconomic environment remained supportive for much of the year, enabling calibrated policy easing. The Reserve Bank of India implemented a cumulative reduction in the policy rate, supporting credit expansion, reinforcing household purchasing power, and sustaining demand across interest-sensitive segments of the economy.

On the fiscal and external fronts, key indicators remained resilient. Government capital expenditure continued to serve as a primary engine of growth, with a sustained focus on infrastructure, energy transition, and digital public infrastructure. GST collections remained robust, while the current account deficit stayed contained and foreign exchange reserves were maintained at comfortable levels, demonstrating stability in the external sector despite a volatile global backdrop.

The latter part of the year, however, saw some moderation in momentum. Elevated geopolitical tensions, particularly in West Asia, contributed to higher crude prices and exerted pressure on the Indian rupee, which depreciated during the year. This led to foreign outflows and prompted a pause in the monetary easing cycle, with policy focus shifting toward currency stability and liquidity management.

Looking ahead, the near-term outlook remains constructive, albeit with emerging external headwinds. Risks linked to commodity prices, capital flows, and geopolitical developments warrant close monitoring. Nevertheless, India continues to be supported by resilient domestic demand, sustained public investment, and structural drivers such as digitalisation and formalisation, positioning the economy well for continued medium-term expansion.

INDIAN INSURANCE SECTOR DEVELOPMENTS General Insurance Industry

Indias non-life insurance industry recorded a notable acceleration in growth during FY2025-26, with gross direct premium income (GDPI) reaching approximately Rs.3.36 lakh crore, representing a healthy year-on-year increase. This marks an improvement over the moderated growth trajectory observed in the previous year, supported by recovery in health insurance, improving momentum across motor and property segments, and favourable regulatory developments.

Growth during the year, however, remained uneven. The first half was impacted by the continued effect of revised accounting norms for long-duration policies, which deferred premium recognition over the policy tenure. In addition, subdued performance in the crop insurance segment weighed on overall growth. Momentum strengthened in the second half as these effects normalised, resulting in a more stable operating trajectory toward year-end.

At a segment level, health insurance remained the principal growth driver, with standalone health insurers delivering strong double-digit growth and accounting for a significant share of incremental premiums. General insurers reported steady expansion, while motor and property segments witnessed a gradual recovery, supported by improved renewal trends and firmer pricing in select commercial lines. Crop insurance, however, continued to face structural headwinds.

The year also witnessed increased strategic activity, supported by regulatory liberalisation. The enhancement of foreign direct investment limits facilitated greater international participation and capital inflows. Strategic transactions, capital market activity, and continued investments in digital infrastructure underscored growing investor confidence in the sectors long-term growth potential.

From a structural perspective, insurance penetration in the non-life segment remains modest, highlighting significant headroom for expansion. Ongoing regulatory initiatives aimed at improving accessibility, promoting digital adoption, and enhancing product innovation are expected to support deeper market penetration and improved customer engagement over time.

Outlook

The outlook remains constructive, with growth expected to sustain in the high single-digit to low double-digit range. Health insurance is likely to remain the primary growth engine, supported by increasing awareness, broader coverage, and continued product innovation. Motor insurance is expected to track underlying vehicle growth, while fire and engineering lines are likely to benefit from infrastructure-led demand and improved pricing discipline.

Structural drivers such as rising disposable incomes, urbanisation, and increasing risk awareness are expected to underpin longterm demand. At the same time, risks arising from commodity price volatility, potential moderation in government spending, and elevated catastrophe exposure warrant continued vigilance.

Overall, the sector remains well positioned to benefit from supportive regulatory reforms, improving operational efficiencies, and sustained demand across both retail and commercial segments, reinforcing its role in enhancing financial resilience and risk protection.

Life Insurance Industry

Indias life insurance industry delivered a strong recovery in FY2025-26, with new business premium (NBP) surpassing the Rs.4 lakh crore milestone for the first time and reaching approximately Rs.4.6 lakh crore. This reflects a robust growth trajectory, supported by a combination of regulatory normalisation, improved consumer sentiment, and favourable demand conditions.

Growth was broad-based, with both public and private sector insurers recording improved performance. The Life Insurance Corporation of India regained momentum following a period of subdued growth, while private insurers continued to expand at a faster pace, supported by diversified distribution capabilities and product innovation. Individual and group segments both contributed meaningfully, with group business exhibiting particularly strong traction.

The industry benefited from a stabilisation following regulatory changes implemented in the previous fiscal, with insurers adapting their product portfolios and distribution strategies accordingly. Enhanced clarity in the regulatory framework, coupled with increased digital adoption, contributed to a more stable and predictable operating environment.

Demand trends remained favourable, particularly in protection-oriented products, driven by increasing financial awareness and a growing focus on income security. Expansion in microfinance-linked insurance offerings further supported penetration in semiurban and rural markets.

Outlook

The medium-term outlook for the life insurance sector remains positive, although growth in FY2026-27 may moderate from the elevated base of the previous year. Structural drivers, including increasing financialization of savings, expanding distribution channels, and favourable demographics, continue to support long-term growth.

Regulatory initiatives and growing foreign participation are expected to enhance market depth, support innovation, and improve operational capabilities. While near-term growth may be influenced by macroeconomic factors and evolving product preferences, the sector remains well positioned to sustain its growth trajectory over the medium term.

Global Reinsurance Outlook 2026-27

The global reinsurance industry entered FY2025-26 in a position of considerable financial strength, underpinned by several years of disciplined underwriting, improved risk selection, and supportive investment returns. However, the year marked a transition in the reinsurance cycle, with pricing across most lines beginning to soften amid abundant capital and increasing competitive intensity.

Leading global reinsurers continued to deliver strong financial performance, supported by favourable loss experience for a significant part of the year. Capital levels remained robust, with continued growth in alternative capital and sustained investor participation reinforcing capacity within the market.

Notwithstanding these strengths, the broader industry environment exhibited signs of normalisation. Profitability moderated relative to peak levels, as elevated catastrophe losses and evolving claims trends weighed on underwriting margins. Combined ratios and return metrics are expected to stabilise at levels more reflective of a mid-cycle environment as pricing discipline gradually moderates.

Performance across business lines remained differentiated. Property reinsurance continued to benefit from residual pricing strength, although early signs of softening have emerged. Casualty reinsurance remains under close scrutiny due to claims inflation and long-tail risk considerations. Life and health reinsurance demonstrated steady performance, supported by normalising mortality trends.

Rating agency perspectives reflected some divergence, with most maintaining stable outlooks, while others highlighted the potential for margin compression arising from increased capacity and pricing competition, particularly in catastrophe-exposed segments.

The outlook for the global reinsurance industry remains cautiously optimistic, albeit with clear signs of cyclical moderation. Pricing across short-tail lines is expected to soften further, placing pressure on underwriting margins. The sustainability of profitability will increasingly depend on disciplined underwriting, prudent capital allocation, and refined risk selection.

Industry fundamentals remain supportive, with improved underwriting structures, stronger capital buffers, and stable investment income providing resilience. However, rising catastrophe frequency, evolving casualty risks, and broader macroeconomic uncertainties are expected to shape operating conditions in the near to medium term.

Overall, while the market has moved beyond its cyclical peak, the sector remains well positioned to sustain reasonable profitability, provided underwriting discipline is maintained and portfolio strategies remain aligned with evolving global risk dynamics.

BUSINESS OVERVIEW

Introduction

The Corporations gross premium income during the year 2025-26 grew by 6.93% to Rs. 44,007 Crores with Domestic and International composition largely unchanged. Incurred loss ratio as a % of earned premium is 85.40% compared to 88.44% in the previous year.

The income from investments (gross) was Rs. 13,122.17 Crore. The ratio of total business expenses to the earned premium i.e. Combined Ratio stood at 106.02%. The Solvency Margin of the Corporation as on 31^st March 2026 was 4.21.

Business Composition

(Rs. in Crore)

Domestic CoB Mix

international CoB Mix

Class wise Performance Domestic

Class of Business	Gross Premium		Incurred Claims Ratio %
	2025-26	2024-25	2025-26	2024-25
Fire	7159	6811	75.92	85.28
Motor	6275	5233	81.02	81.20
Aviation	94	88	121.12	55.53
Engineering	1509	1343	64.78	67.35
W.C.	32	25	5.34	83.20
Liability	681	541	62.30	93.62
PA	705	530	61.24	52.05
Health	9167	9508	85.46	81.64
Agriculture	3298	3188	90.66	90.42
Other Misc.	1084	902	63.02	52.96
FL/Credit	224	209	32.59	0.53
Marine Cargo	374	377	57.26	77.34
Marine Hull	277	236	26.15	46.30
Life	2100	1671	133.50	148.15

International

(Rs. in Crore)

Class of Business	Gross Premium		Incurred Claims Ratio %
	2025-26	2024-25	2025-26	2024-25
Fire	7097	6908	72.00	84.86
Motor	1222	1123	172.12	119.44
Aviation	744	641	201.26	96.13
Engineering	441	423	62.80	73.77
W.C.	3	4	850.91	2389.08
Liability	206	233	133.83	101.61
PA	50	44	65.08	65.96
Health	24	20	53.41	51.22
Agriculture	95	75	63.93	50.04
Other Misc.	315	268	81.41	106.50
FL/Credit	49	91	1.26	-35.86
Marine Cargo	175	135	157.06	224.14
Marine Hull	256	331	83.81	115.49
Life	351	196	155.32	87.57

PROPERTY (FIRE & ENGINEERING)

Reinsurance capacity has increased significantly in recent years, supported by strong earnings, better investment returns, and continued growth in alternative capital. Total global reinsurance capital is now estimated to be above USD 830 billion, with instruments such as catastrophe bonds and other insurance-linked securities playing a growing role in the market.

At the same time, global catastrophe losses remain high, reflecting in part the growing impact of climate change on the frequency and severity of weather-related events. The year 2025 marked the sixth consecutive year in which insured losses exceeded USD 100 billion, largely driven by events such as severe storms, wildfires, floods, and hurricanes in the United States. Secondary perils continue to occur more frequently, while major events still represent the largest potential losses. However, higher retention levels and improved programme structures have helped limit the impact on reinsurers.

Market conditions remain competitive, with the balance of supply and demand favouring cedants in several segments. While overall underwriting discipline has been maintained, abundant capacity continues to influence risk-adjusted pricing outcomes, particularly for well performing programmes.

Overall, the reinsurance market remains strong and well-capitalized. Going forward, climate-related risks are expected to remain a key consideration, making disciplined underwriting, careful risk selection, and efficient use of capital increasingly important as competition continues to increase.

Domestic

The Domestic Fire and Engineering Insurance market recorded a recovery in FY 2025-26, with gross premiums increasing to Rs.34,325 crore from Rs.30,280 crore in FY 2024-25, reflecting a year on year growth of 13.36%. This growth was driven by a combination of exposure expansion and pricing improvements implemented during the year.

Pricing conditions showed an evident improvement from January 1,2025, supported by corrective actions following loss experience in select risks and a broader reassessment of pricing adequacy after a sharp rate cut in the early part of the Fiscal. Increased emphasis on technical pricing discipline by reinsurers, through underwriting feedback and signalling of rate adequacy particularly for loss prone and catastrophe exposed risks partly contributed to the improvement in market premiums.

However, the pricing improvement was neither uniform nor sustained. Competitive intensity increased significantly during the third and fourth quarters, with heightened capacity deployment and aggressive pricing strategies by insurers resulting in rate reductions across several segments, moderating the net impact of pricing gains achieved earlier in the year.

Against this backdrop, GIC Res Domestic Fire and Engineering portfolio recorded measured growth during FY 2025-26, supported by calibrated underwriting actions and selective participation. The Company continued to maintain a disciplined approach to risk selection emphasising underwriting quality rather than volume led growth. Gross premium income increased from Rs.8154.66 crore to Rs.8668.85 crore, registering a growth of 6.30%, consistent with underwriting discipline amid fluctuating pricing conditions.

Obligatory cessions, contributing around 15.53% of the segments premium, continued to play a stabilising role by providing scale, diversification, and persistence of premium flows.

Underwriting performance of the Fire and Engineering (domestic) segment improved during FY 2025-26, with combined ratios of 99.86% for Fire and 83.63% for Engineering, continuing the positive trend observed in the previous year. Loss experience benefited from a relatively benign natural catastrophe environment; however, attritional losses and exposure related volatility remain inherent to the segment.

Notwithstanding the improvement in loss ratios, overall profitability remained subject to structural pressures. Elevated acquisition costs, driven by competitive market conditions, increased bargaining power of ceding companies, and the expanding presence of FRBs, CBRs, and GIFT City IFSC registered IlOs, moderated the extent to which improved underwriting outcomes translated into margin expansion.

The Fire and Engineering portfolio remains exposed to pricing, acquisition cost, catastrophe, market structure, and concentration risks, arising from competitive pressures, natural catastrophe accumulations, and evolving market dynamics. These risks are managed through disciplined underwriting, portfolio level exposure monitoring, appropriate use of retrocession, and enhanced technical evaluation of large and high value risks.

Looking ahead, the outlook for the Domestic Fire segment in FY 2026-27 is expected to remain challenging, with intensifying competition particularly from GIFT City IIOs and broader participation by Foreign Reinsurance Branches likely to increase acquisition costs and exert further pressure on reinsurance margins. Continued competitive pressure in the direct insurance market is also expected to weigh on pricing levels.

In response, the Company will continue to focus on selective underwriting, disciplined pricing, prudent use of retrocession, and strict accumulation management to protect portfolio quality and enhance risk adjusted returns.

Foreign

GIC Res international property business (including the branches) reported a gross premium growth of approximately 2.82% for FY 2025-26 reflecting soft market cycle despite of our continued engagement with key markets and strategic underwriting. The incurred claims ratio for Fire and Engineering declined from 84.06% to 72.41%, as secondary perils (smaller-to-mid-sized natural catastrophe events) dominated global catastrophe losses, despite the absence of a major global peak event. Losses volatility is being driven less by classic peak perils alone and more by medium-sized, climate-sensitive events.

As climate change continues to influence the frequency and severity of both primary and secondary perils, GIC Re remains committed to reinforcing a dynamic and adaptive approach and evolving its strategies in line with emerging global risk trends.

MOTOR

Domestic

Motor insurance remains a key segment of the Indian general insurance market. In recent years, the segment has witnessed steady growth, supported by rising vehicle ownership, increasing insured values, regulatory stability, and gradual improvement in underwriting practices. The rapid adoption of electric vehicles (EVs) represents a key structural shift within the motor insurance market. EVs attract higher average premiums and require specialized coverage for battery systems and electronic components. The GST rationalization in 2025 reduced tax rates on affordable small cars and two-wheelers, making vehicles more affordable and encouraging first-time buyers to enter the market. This price reduction has helped boost vehicle demand and sales, especially in rural and semi-urban markets, supporting growth across the automotive sector.

The regulatory framework governing motor insurance remained stable and progressive, with a continued emphasis on policyholder protection, transparency, and digital enablement, with initiatives aimed at improving transparency, streamlining claims settlement, and enhancing operational efficiency across the sector.

In the financial year 2025-26, GIC Res domestic gross premium increased from Rs.5,232.63 crore in the previous year to Rs. 6,274.65 crore, registering a growth of 20%. Notably, the incurred claim ratio remains 81% similar in line with the previous year, However, the combined ratio has increased from 96.44% to 100.08% due to slightly higher commission to the profitable contracts.

In FY 2025-26, the obligatory premium accounted for 69% of the gross domestic premium, while the remaining 31% came from non-obligatory business. There was a 9.41% increase in the obligatory gross premium for the year ended March 31,2026, compared to the corresponding period of the previous year. GIC Re continued to support the Indian Motor insurance market by providing reinsurance capacity and risk transfer solutions to cedants, while maintaining prudent underwriting standards.

Foreign

The global motor insurance market size is projected at USD 1098.28 Billion in 2026. Several evolving trends are reshaping the motor insurance industry, with insurers increasingly adopting telematics enabled and usage based insurance (UBI) models. GIC Res international motor business recorded an increase in premiums. The gross premium increased by 8.84% year-on year, from Rs. 1,122.95 crore in FY 2024-25 to Rs.1,222.23 crore in FY 2025-26. The combined ratio has deteriorated from 144.54% to 206.04% primarily due to certain territories or treaties entering a run-off phase, with no further premium booking expected from those regions.

Overall Motor

For the Motor portfolio, GIC Res gross premium increased by 18% year-on-year, from Rs.6,355.57 crore in FY 2024-25 to Rs. 7,496.87 Crore in FY 2025-26. Going forward, the focus will be on revamping and expanding the international portfolio by exploring new opportunities, while strengthening GIC Res position in the domestic market.

LIABILITY

The global liability insurance market size, which was valued at $290.45 billion in 2025, is projected to reach $462.93 billion by 2032, growing at a CAGR of 6%. Increased awareness of liability risks, regulatory changes mandating insurance coverage, and evolving court judgments increasing liability exposures have resulted in a significant uptick in the demand for reinsurance capacity to cover extensive and intricate liability risks across sectors like IT, healthcare, construction, and professional services. The Corporation continues to play a crucial role by offering reinsurance support to both domestic and international insurers, facilitating the expansion of their liability insurance portfolios while effectively managing own exposure to large-scale losses. As on 31^st March 2026, the Corporation achieved a GWP of Rs.886.72 crores for Liability class. Indian and international book composition has slightly changed from previous year with an increase in the domestic front, contributing 76% ( 681 crores) and 23% from foreign markets ( 206 crores). The overall GWP increased by 15% from previous year mainly due to several domestic treaties. Increase in GWP coupled with decreased combined ratio of 103.8% as on 31^st March 2026 from 116.7% as on 31^st March 2025 is noteworthy. The Corporation recognizes immense potential in Cyber Insurance and has tried to tap on the opportunities even during this renewal. With opportunities come challenges and the same is addressed through our careful approach in offering cyber capacity. Increasing focus on collating more cyber data and enhancing our analysis for effective management of exposures in this evolving sector tops our priorities. Going forward, the Corporation is poised to leverage expertise in underwriting and risk management to capitalize on emerging opportunities while navigating challenges and the impact of global trends on liability exposures.

MISCELLANEOUS & PERSONAL ACCIDENT

In 2021, the global miscellaneous insurance market had an estimated value of $104.7 billion, with expectations to grow to $279 billion by 2031, marking a 10.6% CAGR over the decade. The demand for miscellaneous insurance is surging globally as businesses and individuals navigate a rapidly changing risk environment. Traditional coverages might not address the unique challenges posed by a changing world. Growing risk awareness and innovative product development by insurers, is propelling the rise of miscellaneous insurance as a crucial tool for navigating todays complex risk environment. The corporation generated INR 2154 Crore in Gross Written Premium (GWP) for Miscellaneous and Personal Accident (PA) insurance, primarily sourced from the domestic market (83%, Rs.1791 Crore) with a growing contribution from foreign markets (16%, Rs.363 Crore). The overall GWP increased by 24%, driven by growth in domestic premiums. Combined ratio has increased primarily due to higher attritional losses. The Corporations strategic focus on innovative products like parametric income protection and identity theft insurance demonstrates adaptability to the dynamic insurance landscape. The corporation aims to provide continued support to both domestic and foreign insurers, facilitating growth in their Miscellaneous and PA insurance portfolios while maintaining profitability in its own operations.

CREDIT RE

Valued at Rs.2,135 Crore in domestic premiums, Indias credit insurance market is currently dominated by a single player, ECGC, with 70% market share. However, the landscape is evolving. Other general insurance companies are leveraging their growth aspirations and expertise to tap into this growing market. Additionally, the introduction of Surety Bonds in 2022 has spurred the insurance companies to offer customized products such as bid bond, performance bonds etc. This is leading to a shift away from traditional bank guarantees and towards bond issuance. The Corporation remains a key player, providing crucial reinsurance capacity in this dynamic market. As on 31^st March 2026, Credit Re GWP is Rs.273 Crores, with 82% premium generated from domestic market ( 225 crores) and 18% from foreign market (Rs.49 crores). The Corporations combined ratio at 31^st March 2026 was 51.8% as compared to 8.9% as on 31^st March 2025. Despite growth opportunities in developing economies, rising interest rates and potential slowdowns might increase credit risk. We plan to navigate this segment in domestic and international markets with prudent exposure management.

HEALTH

Indias health insurance sector continues to expand rapidly, driven by rising public awareness and demand for comprehensive healthcare protection. The market offers a wide spectrum of products, including individual, family floater, and specialized policies for critical illnesses and senior citizens. Government initiatives such as Ayushman Bharat have significantly broadened coverage, reinforcing the sectors social relevance. Despite challenges such as low penetration and regulatory complexities, the industry demonstrates strong growth potential. The adoption of digital technologies and innovative services—such as telemedicine and wellness programs—has further enhanced accessibility and customer-centricity.

According to the General Insurance Council, industry premiums grew by 9.3% during FY 2025-2026, while the health insurance market itself has emerged as one of the fastest-growing segments in the insurance industry, recording an impressive annual growth rate of 15.4% as of March 31,2026. This trajectory underscores both the sectors economic potential and its profound social significance, ensuring access to essential healthcare services for millions of citizens.

Corporations Health Portfolio

The Corporations health portfolio is diversified across several key segments:

• Obligatory cessions: Mandatory reinsurance contracts requiring primary insurers to cede 4% of their health business to the Corporation, accounting for 62% of the portfolio.

• Domestic treaty business: Includes proportional treaties (sharing premiums and risks) and non-proportional treaties (covering specific losses) with domestic insurers.

• Facultative business: Reinsurance on an individual risk basis, offering flexibility in underwriting and pricing.

With a clear strategic focus on expanding its health insurance portfolio, the Corporation has adopted a prudent and methodical underwriting approach. This strategy emphasizes sustainable growth, robust risk management, and diversification across product lines. In FY 2025-2026, health insurance contributed 21% of the total gross premium, reflecting strong performance—particularly in the proportional reinsurance segments.

AGRICULTURE REINSURANCE

In India, Pradhan Mantri Fasal Bima Yojana (PMFBY) was introduced in Kharif 2016, administered by the Ministry of Agriculture and Farmers Welfare. It replaced the National Agricultural Insurance Scheme (NAIS) and Modified National Agricultural Insurance Scheme (MNAIS).

PMFBY provides a comprehensive insurance cover against failure of the crop thus helping in stabilising the income of the farmers and encourage them for adoption of innovative and modern agriculture practices. It covers various stages of crop production from Sowing to Harvesting.

For 2025-26, various states have implemented surplus sharing models (SSM) like 80:110 and 60:130 with idea of capping the loss ratios. Also the states of Maharashtra and Odisha have chosen SSM 80:110-Burn Cost Model and SSM 60:130-Burn Cost Model respectively.

To address the growing fiscal burden of premium subsidies under PMFBY and enhance state-level participation in risk-bearing, the scheme operates on a shared-risk model, where states can choose between full risk transfer to insurers or alternative risk transfer models (ARTM) like Profit & Loss or Cup & Cap to better manage fiscal outgo. Premium rates are kept low and capped at 1.5%-2% for farmers, with the remaining premium heavily subsidized by the Centre and State governments.

Three key ARTM options currently available offer varying degrees of risk horizon and participation:

SSM (80:110) - Liability of the insurer is limited to the loss ratio range 80%-110%. That is, the insurer will return to the state all premiums associated with any profits realized on loss ratios below 80%. On the loss side, the State government will bear all losses for loss ratios above 110%.

SSM (60:130) - Liability of the insurer is limited to the loss ratio range 60%-130%. That is, the insurer will return to the state all premiums associated with any profits realized on loss ratios below 60%. On the loss side, the State & Central Government will bear all losses for loss ratios above 130% equally

Profit and Loss Sharing: This model offers the broadest horizon of risk transfer—covering all losses and gains—but has yet to be adopted by any state or UT due to its high exposure and demand for fiscal discipline. To address the growing fiscal burden of premium subsidies under PMFBY and enhance state-level participation in risk-bearing, India may explore structured Alternative Risk Transfer (ART) mechanisms.

SSM 60:130/80:110-Burn Cost Model - Burn cost is provided by the state. The insurer will return to the state all premiums associated with any profits realized on loss ratios below 60%/80% of rate quoted by the insurer. On the loss side, the State government will bear all losses for loss ratios above 110%/130% of quoted rate or burn cost whichever is higher.

The contribution of SSM models in the total agriculture insurance premium in the country is currently estimated at 65% to 70% of total market premium.

Govt. of India has taken several new technological initiatives under the PMFBY and RWBCIS to empower farmers, streamlining the operations in crop insurance and promote transparency in loss assessment, such as YES-TECH, WINDS and CROPIC.

GIC Re continues to support the crop insurance scheme in India, i.e. Revamped Pradhan Mantri Fasal Bima Yojana scheme (Revamped PMFBY, w.e.f., Kharif 2020 season) & Revised Weather Based Crop Insurance Scheme (RWBCIS) from 2016; by way of extending reinsurance support on quota share treaty and stop loss treaty arrangements of the Indian Insurance companies.

The gross premium under Agriculture portfolio increased to Rs.3,392.86 Crore in FY 2025-26 from Rs. 3263.05 Crore in FY 2024-25. The split of GIC Res Agriculture portfolio between Indian and International business is 97.2% and 2.8% respectively.

The Indian agriculture market premium for year 2024-25 is around Rs.27,900 crore and for 2025-26 is around Rs.20,300 Crore. Out of which the Corporations Indian gross agriculture premium is at Rs.3,298.02 Crore in FY 2025-26 from Rs. 3188.04 Crore in FY 2024-25, a growth of 3.45%. The contribution of obligatory premium is approx. 29.74% of gross Indian agriculture premium. The growth in the domestic portfolio is due to leadership in AICL. The loss ratio in respect of the Indian business has remained stable at 90.66% in FY 2025-26 from 90.42% in FY 2024-25.

GIC Res International gross agriculture premium increased to Rs.94.84 Crore for FY 2025-26 from Rs.75.01 Crore in FY 2024-25, a growth of 26.44%. Also, the loss ratio for International agricultural book was 63.93% for FY 2025-26 comparing to 50.04% in FY 2024-25.

Looking ahead to FY 2026-27, the multi-year agreements have ended, and the states can either choose to go ahead with the existing scheme or can re-tender for one year, which may present new opportunities for reinsurance participation.

MARINE CLASS (CARGO, HULL AND OIL & ENERGY)

MARINE CARGO Domestic

The domestic cargo market continues to exhibit a steady demand for coverage, particularly for high-risk segments like inflammable substances, automobile sectors for complete built units and pharmaceutical products. Requests for the coverage of Stock throughput policies in market are going up. The market pricing is anticipated to remain soft in the upcoming financial year due to recent pricing corrections and challenging geopolitical factors. Even, the facultative market remains soft. Hence, to retain leadership we have adopted the current market trends and price. However, to mitigate risks, we will continue to uphold underwriting discipline by enforcing minimum rates and deductibles.

In light of the recent military escalations involving the USA-Israel and Iran in West Asia, GIC Re issued a notice of cancellation for war facultative covers in high-risk areas; however, no such notice was issued for marine treaty covers. Subsequently, the facultative covers were reinstated within seven days with revised terms and conditions aligned to the prevailing risk environment. Coverage for war perils continues to be provided for cargo with Indian interests in these high-risk regions.

To address the volatility associated with war risk coverage in such areas, the Bharat Maritime Insurance Pool was established and launched on 12^th May 2026. The pool is authorised to extend war risk coverage for cargo shipments with sum insured of up to INR 3,059.43 crore.

There has been an increase of 8.7% in marine cargo gross premium for Indian market to Rs.4,283.89 crores in FY 2025-26 as compared to previous year gross premium of Rs. 3,940.24 Crores. The Corporations domestic marine cargo gross premium decreased by 0.82% to Rs.373.93 crores as compared to gross domestic marine premium of Rs.376.96 Crores in 2024-25.

The Corporations primary focus is on non-proportional treaties and within the segment, it has been providing coverage for diverse cargo types excluding perishable items, aquamarine products and frozen foods. Additionally, the emphasis has been on appropriate clauses, conditions and warranties to meet client needs while advancing our underwriting approach. Ongoing treaty reviews ensure necessary improvements in underwriting performance.

International

The global cargo insurance landscape is undergoing significant changes due to a confluence of factors. Economic slowdown, central bank policies, geopolitical tensions, and supply chain disruptions are creating a complex environment.

Global economic deceleration and central banks anti-inflation measures may reduce trade volumes, impacting cargo insurance. Geopolitical instability, particularly in Russia - Ukraine and Israel - Palestine, Red Sea crisis along with Persian Gulf conflict is further exacerbating these challenges. The industry is grappling with rate reduction, risk accumulation, and coverage with discounted rate for STP and STOP policy. Consequently, the marine reinsurance market is witnessing rate decrease.

Marine Cargo Foreign book increased to INR 175.25 Crores reflecting 30.29% growth from the previous year 2024-25 of INR 134.50 Crores.

The year 2025-26 has seen few market losses like MSC Elsa and Wan Hai loss. However, GIC Re do not have facultative exposure in these losses.

MARINE HULL (INCLUDING OIL & ENERGY)

Domestic

The corporation maintains a strong focus on the facultative segment of the domestic marine hull market, which remains predominantly driven by facultative reinsurance. We actively participate in domestic facultative policies, subject to adequate pricing. Domestic hull insurance rates have soften compared to the previous year due to availability of reinsurance capacity. The Gross marine hull premium for Indian market decreased by 1.8% to Rs.1,535.63 crore in FY 2025-26 over expiring year of gross premium of Rs.1,563.70 crore in 2024-25, while corporations domestic hull book saw a surge of 17.45% to Rs.277.50 Crores from expiry gross premium of Rs.236.27 crores in 2024-25. The corporation continued to refrain from participating in the risks that had inadequate pricing. To align with the governments initiative to boost ports and shipbuilding, the corporation is committed to supporting upcoming projects. There has been increase in demand for RI capacity for Ship Builders Risks. The combined ratio for the domestic hull portfolio has performed better from 57.48% in 2024-25 to 38.09% in 2025-26.

International

The international hull market is facing unprecedented challenges. Geopolitical tensions, supply chain disruptions, inflation, and evolving risk profiles, are driving market volatility.

The war in Ukraine, the Red Sea crisis, and material shortages, primarily steel, have significantly impacted the industry. Rising inflation has increased costs across the value chain, eroding insurers profitability. The frequency of fires on container ships and car carriers, exacerbated by the transportation of lithium-ion batteries and electric vehicles, poses new challenges. There are no large losses this year.

In light of the recent military escalations involving the USA-Israel and Iran in West Asia, GIC Re issued a notice of cancellation for war facultative covers in high-risk areas; however, no such notice was issued for marine treaty covers. Subsequently, the facultative covers were reinstated within seven days with revised terms and conditions aligned to the prevailing risk environment. Coverage for war perils continues to be provided for cargo with Indian interests in these high-risk regions.

To address the volatility associated with war risk coverage in such areas, the Bharat Maritime Insurance Pool was established and launched on 12^th May 2026. The pool is authorised to extend war risk coverage for vessels with sum insured of up to INR 2,039.62 crore.

The corporation has adopted a calibrated approach, withdrawing from upstream energy policies with inadequate pricing and low deductibles. The corporation is exploring opportunities in upstream energy construction. The hull insurance market continues to undergo rate adjustments.

The corporations marine hull foreign book decreased by 22.64% to INR 256.50 crores in FY 2025-26 from expiry INR 331.55 Crores in 2024-25. The reason for these decreases is overall softening of the reinsurance market globally.

The international hull portfolio recorded an adverse combined ratio of 190%, primarily attributed to oil rig explosion in Gulf of Mexico.

AVIATION

The global aviation insurance market continued to experience steady growth during FY 2025-26, supported by rising air passenger traffic, continued expansion of airline fleets, the increasing presence of low cost carriers, and growing aircraft and operational complexity.

Heightened geopolitical uncertainty, evolving security risks, and increasing focus on Environmental, Social and Governance (ESG) considerations continued to influence underwriting strategies across the market.

During the first half of the year, the airline insurance segment largely remained in a soft market phase, characterized by ample capacity and competitive pricing. Despite increased exposure levels and rate pressures, insurers and reinsurers continued to defend market shares through disciplined deployment of capacity. However, market conditions showed early signs of strengthening in the second half, as claims experience from recent major losses, ongoing attritional claims, and heightened geopolitical risks led to more robust renewal negotiations, particularly compared to the prior underwriting year.

Commercial aviation remains one of the safest forms of transportation. Although the industry recorded a slight improvement in the overall accident rate in 2025 (declining from 3.72 accidents per million sectors in 2005 to 1.32 accidents per million sectors in 2025- as per IATA safety report 2025), the year was overshadowed by several high-profile events that had a disproportionate impact on public perception and global fatality figures.

The most significant aviation loss during the year was the June 2025 crash of Air India Flight AI171 shortly after take off from Ahmedabad, involving a Boeing 787-8 Dreamliner. The accident resulted in approximately 260 fatalities, including passengers, crew and ground victims, and marked the first fatal hull loss of the Dreamliner, leading to substantial hull and third party liability claims with global reinsurance implications.

In November 2025, an incident involving a UPS cargo aircraft added further pressure to the global aviation insurance and reinsurance market. Occurring in an already loss impacted year, the event heightened reinsurers focus on cargo operations, fleet age, maintenance standards, and frequency risk associated with integrator airlines. The large jet fuel and oil spill following the crash and post impact fire also drew attention towards environmental impacts of such incidents making it a notable ESG relevant aviation loss.

The Aviation Excess of loss (XOL) treaty market has seen flat renewals despite deterioration of Boeing loss in the XOL market in previous underwriting years and uncertainty for Russia-Ukraine aviation war losses which have seen settlements under strict NDAs. We continue to have little clarity on the incident in January 2025, for the mid air collision near Washingtons Ronald Reagan National Airport involving a regional jet and a military helicopter, which resulted in 67 fatalities.

From an Aviation XOL perspective, the events reinforced perceptions of systemic exposure in complex terminal airspace, contributing to continued cautious capacity deployment, sustained pricing firmness, and increased scrutiny of liability aggregations within aviation reinsurance programmes.

GIC Res gross premium income has increased by 14.95% to Rs.838 Crore in the FY 2025-26 as against Rs. 729 Crore in the previous FY 2024-25. The incurred claims as % to earned premium has increased to 182.81% for FY 2025-26 vis-a-vis 87.40% for FY 2024-25. This can be mainly attributed to considerable claims activity at market level.

The gross premium split comprises 88.78% from international business and 11.22% from domestic business for FY 2025-26 as against 87.87% from international business and 12.12% from domestic business for previous FY 2024-25.

The portfolio continues to be primarily focused on international business, but efforts are made to maintain domestic account signings and increasing them wherever possible to bring balance to the overall portfolio. Looking ahead, the medium-term outlook for the Aviation class remains cautiously optimistic, supported by continued growth in Indian aviation, airport modernization, and stable global demand. However, risks arising from geopolitical developments, increased fatal events, and claims inflation persist.

GIC Re will continue to pursue a prudent, technically driven underwriting approach, supported by strong governance, risk controls, and reinsurance protection, to ensure sustainable performance of the Aviation portfolio.

REINSURANCE POOLS IN INDIA

The practice of establishment of reinsurance pools to cater to situations where supply of insurance is a constraint is well accepted globally. Time and again, the Indian Market has also adopted the practice to overcome capacity challenges imposed by insufficient availability or withdrawal of international reinsurance support. GIC Re, as the Indian Reinsurer has played a pivotal role in creation and successful operation of pools for over two decades. GIC Re has been managing Pools in India and provides its support with very significant capacity as a pool member and as its reinsurer.

The current capacity of the various Indian reinsurance pools are as below:

THE INDIAN MARKET TERRORISM RISK INSURANCE POOL

The Indian Market Terrorism Risk Insurance Pool (IMTRIP) was established in the aftermath of the 9/11 incident in the United States which led to worldwide withdrawal of treaty capacity for Terrorism Insurance. The Pool was formed in April 2002 to create domestic capacity within India to underwrite terrorism risk. The Pool has now completed 24 years of successful operations. Twenty-four nonlife insurance companies (other than monoline insurers) and GIC Re are members of the Pool.

During FY 2025-26, the Pool introduced the following changes:

• Capacity per location was increased from Rs. 2,000 crore to Rs. 2,500 crore.

• Pool rates were reduced.

These measures were aimed at passing on the benefits of the Pools asset base to insureds/customers by providing higher capacity and lower pricing for domestic customers.

A decline in premium cessions on account of change in premium accounting methodology for Long-Term Policies as per IRDAI Master Circular on Actuarial, Finance and Investment Functions of Insurers dated 17.05.2024 continued during FY 2025-26.

The Pools assets stand at Rs.20,351 Crore as at 31.03.2026 ( 18,172 Crore as on 31.03.2025). GIC Re as Pool Manager gets 1% (of original gross premium) Management Commission. Apart from its role as Pool Manager, GIC Re also contributes capacity to the Pool as a member of the Pool to the tune of 16.69% and participates as a reinsurer on the Pools excess of loss reinsurance protection.

5 years pool premium and claims ratio are as per bar chart below.

INDIA NUCLEAR INSURANCE POOL (INIP)

INIP was formed as an initiative by the Corporation along with 11 domestic non-life Insurance companies to provide insurance cover to nuclear operators against their statutory liability under the Civil Liability for Nuclear Damage Act, 2010, resulting from a nuclear incident, and liabilities of Suppliers to the Operator arising out of invocation of right to recourse under the Act.

The Pool provides annual indemnity limit of Rs. 1500 Crore on any one accident and in the aggregate. The pool capacity and rates have remained constant for last one year. No claims have been reported under INIP since its inception. The Pools assets stand at Rs. 1458 Crore as on 31.03.2026. (Rs. 1255 Crore as on 31.03.2025).

GIC Re as a member has 40% share in the pool. GIC Re as Pool Manager gets Management Commission of 1% (of original gross premium).

5 years pool premium are as per bar chart below.

MARINE CARGO EXCLUDED TERRITORIES POOL (MCET POOL)

Due to the withdrawal of international marine cargo insurance capacity for covering imports and exports to/from Russia, Ukraine, and Belarus, there arose a need to create a domestic Marine Cargo Pool to insure shipments related to these Excluded Territories. This withdrawal of capacity stemmed from increased geopolitical risks, sanctions, and instability in these areas, making it difficult for Indian businesses to obtain necessary insurance coverage.

Consequently, the Marine Cargo Pool for Excluded Territories (MCET Pool) was formed and commenced operations on 1^st June 2022. Currently, the MCET Pool provides insurance to Indian insureds for marine cargo shipments of approved commodities to and from the excluded territories of Russia, Ukraine, and Belarus.

The Pool was initially formed with a total of 21 members, contributing a capacity of Rs. 484.80 crores per shipment (net of obligatory cession limits). This was later revised to Rs. 478.80 crores per shipment following the exit of one Pool member. The Pools capacity remains unchanged for the year 2025-26.

GIC Re, as the Pool Manager, along with the Pools Underwriting Committee (UC), approves the inclusion of new commodities under the Pool as needed. Currently covered commodities include fertilizers, pet coke, coal, crude oil and its derivatives, project cargo, steel (Import & Export), etc. Whenever a new commodity is proposed by any Pool member, the Underwriting Committee including GIC Re reviews and determines the applicable rates and terms.

The Pool covers import shipments of all approved commodities. GIC Re holds the largest capacity share at 52.21%. As the Pool Manager, GIC Re receives a 2.5% management commission on the original gross premium (net of obligatory cession).

The MCET Pool does not retain any premium. The entire premium received for the respective quarter/period is retroceded to the pool members in proportion to their participation share.

The accounted premium of the Pool since inception are as per the chart below:

LIFE RE

Life reinsurance helps life insurers strengthen their risk capacity, support growth, and introduce new products. During FY 202526, competition in the Indian life reinsurance market increased with the presence of global players such as Swiss Re, Munich Re, Hannover Re, SCOR and RGA. International Insurance Offices (IIOs) and Cross Border Reinsurers (CBRs) intensified competition, particularly in Group Term Life (GTL) and Microfinance Insurance (MFI), leading to pricing pressure.

GIC Re remains Indias only domestic professional reinsurer with a presence across all life reinsurance segments including retail, group, social security and protection business. Unlike many competitors focused on short-duration business, GIC Re continues to participate in both short-term and long-term products, including Individual Term and Savings business.

GIC Re holds approximately 19% market share in the Indian life reinsurance market and supports more than 23 Indian life insurance companies through Treaty and Facultative arrangements.

GIC Re continues to support key Government initiatives, including:

• Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY)

• Microfinance-linked Credit Life products

• IRDAI-mandated Saral Jeevan Bima

These schemes help improve insurance penetration and social protection across the country.

Premium Growth

Growth was driven by better risk selection, actuarial support, product refinement, and improved analysis of claim frequency and severity. GIC Re has delivered more than 15% year-on-year growth over the last two years.

Domestic and International Business

The Life Re portfolio continues to be dominated by domestic business (~85%), with foreign business contributing the remaining ~15%, reflecting GIC Res emphasis on consolidating its domestic position while pursuing selective international opportunities. Outlook

The Corporation will focus on:

• Expanding protection-focused retail products

• Growing structured group solutions for financial institutions

• Maintaining underwriting discipline in a competitive market

• Pursuing selected international opportunities with a risk-based approach

Supported by strong domestic presence, responsible underwriting, analytics-driven pricing and alignment with national priorities, GIC Re aims to continue delivering sustainable growth in the life reinsurance business"

FUTURE OUTLOOK

The future outlook for the reinsurance industry in 2026 is cautiously optimistic, with strong fundamentals supporting profitability but several headwinds creating uncertainty. These include climate change, risks of natural disasters and new regulations in the offing. Competition amongst insurers is expected to result in soft pricing and moderation in profitability. Underwriting is expected to be disciplined and overall, the market is expected to be favourable for reinsurers.