General Insurance Corporation of India Management Discussions

ECONOMIC OVERVIEW

Global Economy

According to IMF, the global economic growth is estimated to have slowed to 3.4% in 2022 as it witnessed several headwinds that hampered its growth and stability. The ongoing conflict between Russia and Ukraine disrupted global supply chain and led to a sharp increase in inflation. To combat this, central banks around the world tightened monetary policy, which slowed down demand and further dampened economic growth. The US Federal Reserves aggressive monetary tightening weighed on investment and economic activity, leading to a drop in business and consumer confidence. China faced several hurdles due to COVID-related restrictions and mounting pressure on its real estate market. These factors contributed to sluggish global trade and decline in investment activity leading to subdued global economic growth.

The global economy continues to witness several roadblocks to growth led by inflationary pressures, tighter monetary policy, and geopolitical tension. Amid these uncertainties, the global economic growth is expected to decline to 2.9% in 2023 as rising borrowing costs and worsening liquidity conditions is likely to slow the process of economic recovery. The global economys trajectory is dependent on the resolution of the Russia-Ukraine conflict, the rate of monetary tightening, and the reduction of pandemic-related supply chain disruptions. The road ahead is riddled with uncertainty, and policymakers will need to take proactive measures to manage these issues and ensure its stability and resilience. Tailwinds to growth will primarily come from fading pandemic-related shocks, high inflation, and monetary policy tightening.

Indian Economy

The Indian economy demonstrated resilience and continued to be one of the fastest-growing major economies amidst a slowing global economy and rising interest rates and grew by 7.2% in FY23. While ongoing policy tightening to curb high inflation caused by supply chain disruptions resulting from the Russia-Ukraine conflict dampened the growth momentum, increase in governments infrastructure spending, robust private demand and increased credit to the private sector supported economic activity. The Indian economy remained remarkably resilient in the face of these challenges, thanks to ongoing policy reforms and prudent regulatory measures that ensured strong macroeconomic fundamentals. The services sector emerged as the main driver of growth, while the manufacturing sector struggled with elevated input prices and uneven demand recovery. Despite the headwinds, the Indian economys resilience in the face of global and domestic challenges bodes well for the countrys long-term growth potential.

Indias economic growth is expected to moderate to 5.9% in FY24 according to IMF estimates on the back of challenging external conditions, monetary policy tightening, and decline in consumption growth. Exports could face headwinds and rising borrowing costs could impact personal consumption thus curtailing economic growth. However, governments increased focus on infrastructure spending is likely to have a large multiplier impact and support investment and manufacturing activities and improve overall growth outlook. Moreover, slowing consumption growth, decline in global commodity prices along with lag impact of monetary policy tightening is likely to tame inflation. As such, the Indian economy is anticipated to show resilience in the face of challenging global economic environment and emerge as one of the fastest-growing economies in the world.

INDIAN INSURANCE SECTOR DEVELOPMENTS

General Insurance Industry

The gross direct premium underwritten by non-life insurance companies increased by 16.4% to Rs. 2.57 Lakh Crore compared to Rs. 2.21 Lakh Crore in FY22 led by growth in the health and motor insurance. Gross direct premium underwritten by the general insurers witnessed a growth of 16.3% to Rs. 2.15 Lakh Crore as compared to Rs. 1.85 Lakh Crore in FY22 while gross direct premium underwritten by standalone private health insurers increased by 25.8% to Rs. 26,242.29 Crore as compared to Rs. 20,867.24 Crore in FY22. Health insurance premiums have been the primary growth lever of the non-life insurance industry having grown by 23.2% YoY on the back of Ayushman Bharat scheme and other medical options made available due to pandemic-induced awareness. Motor insurance registered a growth of 15.4% YoY on the back of last years low base, the increase in Motor TP rates and higher vehicle sales.

According to CARE Ratings, the Indian non-life insurance market is expected to grow by approximately 13-15% over the medium term. The health insurance segment is expected to grow at around 15-18% and cross the ?1 Lakh Crore mark while motor insurance premiums is expected to grow at 11.5%-13.5% crossing Rs. 85,000 Crore in FY24. The growth would be driven by the popularity of health and motor insurance products on the back of rise in per capita disposable income levels.

Life Insurance Industry

The domestic life insurance industry registered a growth of 17.9% for new business premium in 2022-23, generating a revenue of Rs. 3.71 Lakh Crore compared to Rs. 3.14 Lakh Crore in the previous year primarily due to growth in single premiums especially by LIC and individual non-single premiums, more specifically by private companies. The total premium of Life Insurance Corporation of India (LIC) in FY23 grew 16.7% to ?2.32 Lakh Crore from Rs. 1.99 Lakh Crore whereas Private insurers registered a growth of 20.0% YoY. LIC share of new business premium (NBP) fell slightly to 62.6% in FY23, one of the lowest levels in recent times due to the introduction of the new tax regime, which eliminates exemptions previously used as a significant selling point by LIC agents and other life insurance businesses. Private insurance companies continue to extend their lead in the individual non-singe premium segment and pushed non-par policies to high-net-worth individuals aggressively prior to the beginning of new taxation regime in April 2023.

The life insurance industry is expected to grow in double digits on the back of increased awareness about the importance of protection and retirement planning among the Indian population. Given the protection gap and insurance requirements, the long-term growth of the life insurance segment remains intact. The industry is likely to witness innovation in products and processes and continue to have significant digital intervention. The growth would also be driven by a supportive regulatory landscape, a push to increase insurance coverage, especially in the rural populace, and product innovations. With the continued focus on digitalisation and innovation, the industry is expected to witness further growth in the coming years.

Source: GI Council & LI Council

GLOBAL REINSURANCE OUTLOOK 2023

The reinsurance market is undergoing a fundamental shift in pricing and risk appetite. The January 2023 reinsurance contract renewals witnessed momentum in the pace of price increases for property reinsurance as well as in specialty and casualty reinsurance lines. Shocks to macroeconomy in the form of increasing interest rates to curb inflationary environment, heightened geopolitical risks, frequent natural disasters, and capacity limitations has led to sharp increase in premium rates and tightening of terms and conditions, rarely seen in this market before. The Russia-Ukraine war led to price increases in affected specialty lines such as political risk and aerospace while persistent and elevated catastrophe losses led to price increases in property markets. Reinsurers looked to enhance coverage certainty by adding exclusions to all-risks cover or moving to named perils as they had suffered severe surprise losses in recent years.

In recent years, there has been a significant increase in losses caused by secondary perils like floods, convective storms, winter storms, and wildfires. These secondary perils have contributed to more than 60% of the total insured catastrophic losses over the past five years. Consequently, there has been a re-evaluation of the risks associated with catastrophes, prompting some reinsurers to reduce their exposure or withdraw from providing catastrophe coverage altogether. So far, there has been minimal infusion of new capital from traditional reinsurers, and even alternative capital providers such as pension funds, who invest in insurance linked securities (ILS) like catastrophe bonds, have limited their contributions and remain cautious.

AM Best and Moodys have maintained their market segment outlook for the global reinsurance segment at stable on the back of positive pricing momentum and enhanced market discipline. However, Moodys has sounded caution on the sectors high exposure to natural catastrophe events which along with both economic and social inflation trends could pose threat to earnings going forwards. Nevertheless, the rating agency expects further improvement in the sectors underwriting performance due to hardening of rates driven by significant cat losses in previous years. Moreover, reinsurers are expected to maintain very strong capital adequacy supported by prudent risk management and past earnings retention.

GICS BUSINESS PERFORMANCE

The Corporations gross premium income during the year 2022-23 was Rs. 36,591.59 Crore and the income from investments was Rs. 10,594.00 Crore. Underwriting results show an overall loss of Rs. 2,341.37 Crore in 2022-23 compared to an underwriting loss of Rs. 4,266.11 Crore in the previous year. The ratio of total business expenses to the earned premium i.e. Combined Ratio stood at 109.31%. The Solvency Margin of the Corporation as on 31st March 2023 was 2.61.

CLASS WISE PERFORMANCE

FIRE

GIC Res Earned premium for Fire Business for the year 2022-23 is Rs. 11,379.93 Crore as compared to Rs. 11,099.64 Crore in the previous year.

The Domestic Earned premium has increased by 2.41% to Rs. 5,148.89 Crore from Rs. 5,027.92 Crore in the previous year. The Foreign Earned premium increased by 2.62% to Rs. 6,231.04 Crore from Rs. 6,071.72 Crore in the previous year.

The overall incurred claims ratio stood at 91.70% compared to 91.50% last year.

The fire portfolio made a 13% underwriting loss as compared to the loss of 8.8% in the previous year. The combined ratio for fire stood at 114.27% as against 109.70% for last year.

MARINE HULL & OFFSHORE ENERGY

The gross premium income for the financial year 2022-23 is at Rs. 560.27 Crore as compared to Rs. 656.84 Crore in the previous year reflecting a degrowth of 14.7%. The degrowth in volume is mainly due to underwriting measures taken by GIC by weeding out of treaties with adverse loss experience.

The Financial Year ended with an underwriting loss of Rs. 293.89 Crore which is 52.29% of earned premium. On the foreign business front, there have been high value energy losses i.e. CNOOC Tianjin (Peng Lai), Typhoon Muifa, Sakarya Gas Field which have impacted the foreign business performance. Necessary underwriting corrections have been initiated in the business writings.

Whilst growth is projected to remain stable, the underwriting performance is expected to improve following the measures initiated.

MARINE CARGO

Cargo gross premium income for the Financial Year 2022-23 is Rs. 611.39 Crore vis a vis Rs. 1,244.02 Crore previous year reflecting a degrowth of 50.85%. In the domestic market, GIC Re continues to be the leader across most of the Indian reinsurance treaties. Domestic premium volumes have increased due to pricing correction.

The year ended with underwriting profit of Rs. 340.33 Crore which is 41.23% of earned premium. There are no such significant market losses last year.

GIC Re continues to lay emphasis on underwriting discipline in terms of minimum rates and deductibles besides appropriate clauses, conditions and warranties in the business acceptances. Treaties are being reviewed at renewal for necessary improvements based on underwriting results.

For the next financial year, we anticipate flat to hard market conditions to continue on the back of pricing correction and recent geopolitical developments. Increase in global commodity prices have resulted an increased turn-over/sum insureds of cargo policies which in turn translates into higher premium income.

AVIATION

GIC Res gross premium income has reduced by 15.57% for the Financial Year (FY) i.e. from Rs. 986.95 Crore in the previous year to ?833.29 Crore. The incurred claim for FY 2022-23 is at Rs. 470.92 Crore vis-a-vis Rs. 670.01 Crore for FY 2021-22. The incurred claims have reduced by 29.71% as against 15.57% reduction in written premium. GICs Aviation portfolio is being streamlined with emphasis placed on improving the bottom line, risk selection and reducing acquisition costs.

(Rs in Crore)

Particulars	FY2022-23	FY2021-22	Growth (%)
Gross Written Premium	833.29	986.95	(15.57)
Earned Premium	398.82	600.30	(33.56)
Incurred claims	470.92	670.01	(29.71)

The aviation insurance market rate increase which started in 2019 is now tapering off and the soft cycle appears to be setting in. The market is in a consolidation phase with market players holding on to their market shares.

We continue to be prudent in our risk selection, conscious of the price offer and deploying our capacity judiciously. We are realigning our lines on different segments based on their pricing and risk factors. As the domestic portfolio has shown positive performance, we strive to rate increase, risk selection and pricing, and policy terms and conditions.

LIABILITY

Liability insurance is a crucial form of coverage that provides financial protection to individuals and businesses against potential lawsuits or third-party claims. This type of insurance serves as a safeguard against the monetary repercussions of incidents such as personal injury, property damage, or other liabilities that may arise.

Liability Insurance Market Size in 2021 stood at USD 251,700 million and is set to reach USD 418,800 million by 2030, growing at a CAGR of 5.9%. It is experiencing substantial growth as an increasing number of individuals and businesses understand the importance of safeguarding their assets and livelihoods. Obligatory cessions have been capped at 4% since 01.04.2022.

(Rs in Crore)

Particulars	2022-23	2021-22	Growth (%)
Gross Written Premium	833.12	784.13	6.25
Earned Premium	716.63	718.17	(0.21)
Incurred claims	534.17	442.83	20.63

AGRICULTURE REINSURANCE

GIC Re continues to support the Indian Crop Insurance Industry in the major scheme, i.e. Revamped Pradhan Mantri Fasal Bima Yojana scheme (Revamped PMFBY, w.e.f., Kharif 2020 season) & Revised Weather Based Crop Insurance Scheme (RWBCIS) since 2016.

Integration of land records with the PMFBYs National Crop Insurance Portal (NCIP), increasing use of technology in crop monitoring and loss assessment, improved timelines of subsidy settlement are some of the key features of the scheme which is currently in its 7th year of implementation.

In the underwriting year 2022-23, GIC Re has not changed the terms extended in previous year except wherever deemed necessary. New schemes like Surplus Sharing Models (SSM) (60:130, 80:110) are also being introduced in the domestic market with the idea of a cup and cap on losses. A few States are experimenting with the SSM business and GIC Re is ensuring adequate capacity within its desired limits.

GIC Re has taken a cautious approach in underwriting this business to improve the bottom line of the portfolio with a focus on clients with strong claims management and underwriting discipline. The gross premium under Agriculture portfolio has reduced to Rs. 5,074 Crore in 2022-23 from Rs. 7,911 Crore in 2021-22. The split of GIC Res Agriculture portfolio between domestic and foreign business is 99% and 1% respectively.

The yearly development of Gross Reinsurance Premium of the Agriculture portfolio is shown below:

HEALTH

GIC Re Health portfolio comprises mostly of Obligatory cessions and Domestic proportional & Non-proportional treaties, Facultative and Government Mass Health Schemes, besides business written by the foreign branches.

(Rs in Crore)

Particulars	2022-2023	2021-2022	Growth (%)
Gross Written Premium	4,887.62	4,517.81	8.19
Earned Premium	4,581.86	4,844.82	(5.43)
Incurred claims	3,907.86	4,710.77	(17.04)

MOTOR

The Gross Motor premium during the fiscal year 2022-23 is Rs. 5,995.43 Crore as against Rs. 9,742.28 Crore in the corresponding previous year. The decrease in premium by about 38.5% is mainly due to the reduction in obligatory cessions and degrowth in the overseas business. Incurred claims as a percentage to Earned Premium is 100.70% as compared to 77.80% in previous fiscal year. The figures are illustrated below:

(Rs in Crore)

Particulars	2022-23	2021-22	Growth %
Gross Written Premium	5,995.43	9,742.28	(38.46)
Earned Premium	7,859.55	9,139.32	(14.00)
Incurred Claims	7,910.83	7,110.30	11.26

Year on Year Earned Premium development is shown below:

The split of GIC Res Motor portfolio between domestic and foreign business is 64.50% and 35.50% respectively. Domestic business composition increased from 47.40% to 64.50%. Foreign business composition of the portfolio has decreased to 35.50% from 52.60% in the previous year mainly due to restructuring of foreign Motor treaties especially in Israel and USA. Whilst GIC Re maintains its dominant position in the domestic market, opportunities to further diversify the foreign portfolio will be explored.

Performance of the Motor portfolio is expected to further improve in FY 2023-24 with underwriting improvement as the department is mainly focused on price correction in view of expected market hardening in OD & TP segment and focused on overall cautious underwriting approach.

OTHER MISCELLANEOUS & PA

There has been marginal shortfall of overall premium in these classes in comparison to the expiring year. There is marked reduction in the Incurred claims for both Other Miscellaneous and Personal Accident by around 45% and 27% respectively, mainly due to prudent selection of risks and improvement in pricing of risks by the department. The Combined ratio for Other Miscellaneous and Personal Accident is below 100%.

The department has been constantly endeavouring to provide sufficient capacity to cedants through treaty and facultative arrangements and also supporting new types of approved insurance covers.

Other Miscellaneous

(In Rs Crore)

Particulars	2022-23	2021-22	Growth (%)
Gross Written Premium	764.13	791.64	(3.47)
Earned Premium	652.47	651.91	0.08
Incurred claims	254.51	466.50	(45.44)
Combined Ratio	59.04	79.71

Personal Accident

(In Rs Crore)

Particulars	2022-23	2021-22	Growth (%)
Gross Written Premium	463.76	449.22	3.23
Earned Premium	446.06	579.79	(23.06)
Incurred claims	336.47	462.62	(27.26)
Combined Ratio	97.63	104.27

LIFE REINSURANCE

India is ranked 9th among 88 countries in Life Insurance Business. At present, there are 24 Life Insurance Companies operating in India. (Source: IRDAI Annual Report 2021-22)

In life insurance business, Indias share in global life insurance market was 3.23% during 2021. Life insurance premium in India increased by 14.16 percent in 2021 whereas global life insurance premium increased by 9.91 per cent (Source: IRDAI Annual Report 2021-22). GIC Re recorded a growth of around 5% in life reinsurance business in 2022-23, with gross premium increasing from Rs. 1450.76 Crore to Rs. 1,529.52 Crore. Earned premium for 2022-23 also grew significantly by 19%, increasing from Rs. 1,290.15 Crore to Rs. 1,533.43 Crore.

GIC Re currently provides support to 22 Indian life insurance companies through both Treaty & Facultative reinsurance program. GIC Res market share in life reinsurance business in India is around 23% during the FY 2021-22.

GIC Re continues to support Life Insurance Companies on Financial Inclusion schemes such as Microfinance. Also, GIC Re provides support to IRDAI mandated Saral Jeevan Bima product which is a standard term life insurance plan offering basic protection to people who are self-employed or belonging to a lower income category.

THE INDIAN MARKET TERRORISM RISK INSURANCE POOL

The Indian Market Terrorism Risk Insurance Pool was formed in April 2002 to create domestic capacity within India to underwrite terrorism risk. The Pool has now completed 21 years of successful operations. All Indian non-life insurance companies (other than monoline insurers) and GIC Re are members of the Pool. The Pool is applicable to insurance of terrorism risk covered under property insurance policies. There was no change in the capacity offered by the Pool from previous year which is Rs. 2,000 Crore per location. Premium rates also remained unchanged from previous year. The Pools premium income for 2022-23 was Rs. 1,809.02 Crore and Claims paid by the Pool during 2022-23 were Rs. 2.11 Crore. No major losses were reported to the Pool during 2022-23. GIC Re continues to successfully administer the Pool. Apart from its role as Pool Manager, GIC Re also contributes capacity to the Pool as a member of the Pool and participates as a reinsurer on the Pools excess of loss reinsurance protection.

INDIAN NUCLEAR INSURANCE POOL (INIP)

INIP was formed as an initiative by GIC Re 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, as also liabilities of Suppliers to the Operator arising out of invocation of right to recourse under the Act. The Pool is managed by GIC Re. The Pool provides indemnity limit of Rs. 1500 Crore on any one accident and in the aggregate. No claims have been reported under INIP since its inception.

MARINE CARGO FOR EXCLUDED TERRITORIES POOL (MCET POOL)

Due to the withdrawal of Marine Cargo insurance capacity to cover imports/exports to/from Russia, Ukraine and Belarus, the need to create a domestic Marine Cargo Pool for covering shipments pertaining to the Excluded Territories (MCET Pool) came into place. Consequently, MCET pool was formed, and it started its operations from 1st June 2022. Currently, the MCET Pool provides insurance for Indian insureds for Marine Cargo shipments of commodities from the excluded territories of Russia, Ukraine, and Belarus to India. The pool incepted its operations with a total of 21 members, contributing a capacity of Rs. 484.80 Crore per shipment (excluding Obligatory Cession). GIC Re is the Manager of the Pool and has the maximum capacity share of 51.56% (Rs. 250 Crore out of Rs. 484.8 Crore). Some of the commodities covered by the Pool are fertilizers, pet coke and coal, crude oil and its derivatives, project cargo, steel items and all forms of steel etc.

SEGMENTWISE CLAIMS EXPERIENCE

(Rs in Crore)

		INDIAN			FOREIGN
Particulars	Financial Year	Earned Premium	Incurred Claims	Incurred Claims Ratio	Earned Premium	Incurred Claims	Incurred Claims Ratio
Fire	2022-23	5,148.89	3,390.90	65.9%	6,231.04	7,046.04	113.1%
Fire	2021-22	5,027.92	3,470.20	69.0%	6,071.72	6,681.62	110.0%
Engineering	2022-23	866.35	583.30	67.3%	444.50	413.04	92.9%
Engineering	2021-22	647.34	565.18	87.3%	521.89	456.56	87.5%
Marine	2022-23	603.04	312.97	51.9%	784.45	799.39	101.9%
Marine	2021-22	546.72	508.58	93.0%	1,645.58	1,619.06	98.4%
Aviation	2022-23	87.37	39.46	45.2%	311.45	431.46	138.5%
Aviation	2021-22	125.08	138.79	111.0%	475.22	531.22	111.8%
Agriculture	2022-23	5,110.99	4,931.41	96.5%	144.40	122.13	84.6%
Agriculture	2021-22	6,170.74	6,097.59	98.8%	493.02	371.81	75.4%
Motor	2022-23	4,235.05	3,469.71	81.9%	3,624.50	4,441.12	122.5%
Motor	2021-22	4,924.88	3,557.10	72.2%	4,214.44	3,553.20	84.3%
Misc. Other	2022-23	6,103.36	4,716.60	77.3%	579.18	448.83	77.5%
Misc. Other	2021-22	6,218.48	5,640.30	90.7%	920.24	697.52	75.8%
Life	2022-23	1,357.44	1,409.32	103.8%	175.98	183.67	104.40
Life	2021-22	1,165.20	2,602.76	223.4%	124.94	134.33	107.5%
Total	2022-23	23,512.49	18,853.67	80.2%	12,295.50	13,885.68	112.9%
Total	2021-22	24,826.36	22,580.52	91.0%	14,467.05	14,045.32	97.1%

INVESTMENT

INDIAN ECONOMY 2022-23

FY 2022-23 marked the 75th year of Indias Independence and to add to the specialty, India overtook UK to became the worlds fifth largest economy. In real terms, the Indian economy is expected to grow at 7% for the year ending March 2023. This follows an 8.7% growth in the previous financial year.

Global growth is projected to fall from an estimated 3.4% in 2022 to 2.9% in 2023, then rise to 3.1% in 2024. The forecast for 2023 is 0.2% point higher than predicted in the October 2022 World Economic Outlook (WEO) but below the historical (2000-19) average of 3.8 percent. As per International Monetary Fund (IMF), Global inflation is expected to fall from 8.7% in 2022 to 7% in 2023 and 4.9% in 2024, which is still above pre-pandemic (2017-19) levels of about 3.5%. The rise in central bank rates to fight inflation and Russias war in Ukraine continue to weigh on economic activity. In context of India, rising international commodity prices contributed to the rising retail inflation accompanied with the local weather conditions like excessive heat and unseasonal rains, which kept food prices high. Indias retail inflation rate peaked at 7.8% in April 2022, though for FY 2023-24, it is projected at 5.2%. The government cut excise and customs duties and restricted exports to restrain inflation. The Reserve Bank of India (RBI) began the monetary tightening cycle in April 2022 & coming to the end of the year, had raised the repo rate by an unprecedent 225 basis points in a single financial year, which evidently shows the highly influential impact of incessant Russia Ukraine war on the global economy.

With monetary tightening, the US dollar has appreciated against several currencies, including the rupee. However, the rupee has been one of the better-performing currencies worldwide, but the modest depreciation it underwent may have added to the domestic inflationary pressures besides widening the Current Account Deficit (CAD). The Reserve Bank of India used its forex arsenal to stabilize the depreciating rupee to cushion the valuation losses and capital outflows.

Production Linked Incentive (PLI) schemes have shown fruitful results in terms of prospering covered industries. The Schemes were introduced across 14 categories, with an estimated capex of Rs. 4 Lakh Crore over the next five years, to plug India into global supply chains

As per Economic Survey 2022-23, Indias growth rate is expected at 6.0 % - 6.8% in 2023-24. IMF projection at 5.9% makes it among the lowest growth forecasts for India in comparison with other multilateral development banks, with the World Bank projecting a 6.3 per cent growth rate and the manila-based Asian Development Bank forecasting 6.4 per cent GDP growth for FY24. Yet India will continue to be the fastest-growing economy in the world.

With most sectors now open for 100% Foreign Direct Investment (FDI) under the automatic route, there has been a visible structural shift in the gross FDI flows to India. Indias gross FDI has increased from an average of 2.2 per cent of GDP during FY05-FY14 to 2.6% in FY15-FY22 The highest-ever annual gross FDI inflow of USD 84.8 billion was recorded in FY22. These trends are an endorsement of Indias status as a preferred investment destination amongst global investors.

In the financial year 2022-23, the Indian stock markets have given negative returns. The Nifty 50 index declined by 1.76% and S&P BSE Sensex declined by 0.48%. The performance of the indices remained muted in 22-23 due to the geo-political tensions, interest rate hikes by the central banks, and the slowdown in the economy. Major events including the collapse of the Silicon Valley Bank (SVB), Credit Suisses buyout by rival UBS, global inflation and continuing geopolitical tensions kept the stock markets on edge. Domestic markets in India have been performing in line with the global correction. Weak economic prospects in developed markets and relatively higher growth in emerging markets would increase foreign portfolio investments allocation to select emerging markets. Given its structural growth potential, India will likely stand strong relative to other economies despite issues such as high inflation and a weakening currency.

Based on IRDAI guidelines, 45% of the assets need to be invested in Directed Sector comprising Central/ State Government Securities, Government Guaranteed Bonds, Housing and Infrastructure Sector. Balance 55% to be invested in Market Sector and these investments are subject to prudential and exposure norms.

The Corporation has diligently followed the IRDA guidelines. As on 31st March 2023, the Directed sector investments stood at 69.60% of the total investment assets of the Corporation.

The book value of investment of the Corporation stood at Rs. 86,175.41 Crore from Rs. 77,348.78 Crore showing an increase of Rs. 8,826.63 Crore representing a growth of 11.45% over the previous year. The realizable value of investments is at Rs. 1,17,568.89 Crore as on 31.03.2023 showing an appreciation of 36.43% over book value. Income from investments stood at Rs. 9,968.33 Crore with a mean yield on funds at 12.19%. The net non-performing assets percentage was at 0.02%.

GIC RES RETROCESSION PROGRAM

The Corporation has arranged Risk and/or Catastrophe Excess of Loss Reinsurance for various classes of business based on its internal evaluation of retrocession requirements. The programme protects Corporations net retained portfolios of domestic and foreign business. On large sized risks, wherever necessary, the Corporation arranges for facultative retrocession. Placements have been made with securities in line with relevant regulations.

FUTURE OUTLOOK

The demand for reinsurance capacity continues to grow as primary insurance carriers seek out stable results and capital efficiency in an uncertain market environment. Additionally, healthy capital adequacy, positive pricing momentum, enhanced market discipline, including tighter terms and conditions, rising reinvestment yields and strong demand for reinsurance protection is likely to contribute to positive outlook for the sector.

In accordance with Part IV of Schedule B of the Insurance Regulatory and Development Authority (Preparation of Financial Statements and Auditors Report of Insurance Companies) Regulations, 2002, the management of the Corporation hereby:

1. Confirms that the Registration No. 112 granted by the Authority continues to be valid.

2. Certifies that all the dues payable to the statutory authorities have been duly paid.

3. Confirms that the shareholding pattern as well as transfer of shares during the year is in accordance with the statutory or regulatory requirements.

4. Declares that the funds of the holders of policies in India are not directly or indirectly invested outside India.

5. Confirms that the required solvency margins have been maintained.

6. Confirms that the Corporations risk exposure consists of (a) Obligatory and Additional Quota Share Cessions (b) Facultative acceptances (c) The Corporations share in Indian Insurance Companies through Surplus Treaties and Excess of Loss programme (d) The Corporations share in Market Surplus Treaties and (e) Foreign Inward business Treaty and Fac. Except pure retro business, the exposures are adequately protected by the Corporations Reinsurance Programme for 2022-23.

7. (a) The Corporations overall top ten country exposures, are as follows:

United States of America, United Kingdom, Israel, China, Sweden, Hong Kong, Malaysia, United Arab Emirates, Germany and France.

Based on experience, internal evaluation of changes in portfolio exposures and analysis of catastrophe modelling software output, the Corporation constantly reviews and refines its retrocession programme for various classes of business.

The Corporation has a Board approved Reinsurance Protection Programme in place.

(b) Certifies that the Corporation does not operate directly in any country. Its branch in GIFT City (Special Economic Zone, Gujarat) in addition to Reinsurance business within SEZ and from outside country, can also transact direct insurance business within the SEZ including IFSC, except those which are specifically excluded. The Corporation has foreign branch offices at Kuala Lumpur, Dubai (Branch put into run-off) and London.

8. The portion of the claims recoverable under the reinsurance obligation of the Corporation are settled with the reinsured as per agreed arrangements, i.e. through cash calls and periodical account statements. Additionally, claims in respect of run-off aviation policies issued prior to being designated as an Indian reinsurer are settled to the insured. The position of Ageing of outstanding facultative claims under the categories of Indian, Foreign Inward and Aviation Business as on 31st March 2023 is as under:

(Rs in Thousand)

	Ageing of Facultative Claims as on 31.03.2023
	FIRE		MARINE		ENGINEERING		AVIATION		LIABILITY		MISCELLANEOUS		TOTAL
Sl. No. Outstanding Period	No. of Claims	Amount	No. of Claims	Amount	No. of Claims	Amount	No. of Claims	Amount	No. of Claims	Amount	No. of Claims	Amount	No. of Claims	Amount
1 30 days	3	34,100	4	4,073	1	1,70,000	8	31,315	-	-	-	-	16	2,39,488
2 >30 days upto six(6) months	45	6,54,732	21	16,47,265	5	3,51,864	61	3,26,599	2	50	2	33	136	29,80,543
3 >6 months upto 1 year	68	16,69,666	24	8,06,245	14	1,68,782	92	2,61,491	5	350	4	6,575	207	29,13,109
4 1 year upto 5 years	634	37,32,446	208	19,58,440	170	12,40,853	791	37,57,103	75	1,55,978	45	36,608	1,923	1,08,81,429
5 >5 years	454	28,52,788	163	8,34,681	309	10,99,757	1,537	18,35,405	33	2,55,274	79	82,654	2,575	69,60,560
TOTAL	1,204	89,43,732	420	52,50,704	499	30,31,256	2,489	62,11,913	115	4,11,653	130	1,25,871	4,857	2,39,75,129

9. This is to certify that the values as shown in the balance sheet of the investments and stocks and shares have been arrived at as stated in Significant Accounting Policies No. 9.

10. Declares that the review of asset quality and performance is as mentioned below for Loans and Investments:

INVESTMENTS

The book value of the investment as on 31st March 2023 has increased to Rs. 86,175.41 crore from Rs. 77,348.78 Crore. The realizable value of investments is at Rs. 1,17,568.94 Crore as on 31st March 2023 showing an appreciation of 36.43% over book cost. Income from investment including Profit on Sale amounted to Rs. 9,968.33 Crore as against Rs. 9,363.43 Crore in the previous year. Out of the total investment of Rs. 86,175.41 Crore, Rs. 46,297.34 Crore are invested in Government Securities and State guaranteed Bonds. Book Value of equity shares is at ?15,144.73 Crore and market value stood at Rs. 46,533.12 Crore showing net fair value appreciation of ?31,388.39 Crore.

Out of the Investment, loan as on 31st March 2023 stood at Rs. 165.84 Crore compared to Rs. 185.75 Crore in the previous year. Out of the total loan amount of Rs. 165.84 Crore, Rs. 159.00 Crore are either secured or guaranteed by the Government bodies representing 95.87% of total loans and the balance Rs. 6.84 Crore are unsecured. Interest income from loans amounted to Rs. 11.97 Crore.

Standard performing assets account for Rs. 114.90 Crore and an amount Rs. 50.94 Crore has been provided for the non-performing assets.

Gross NPA as on 31st March 2023 amounted to Rs. 1,548.86 Crore and Net NPA Rs. 10.11 Crore. Gross Loan Assets amounted to Rs. 62,528.95 Crore and Net Loan Assets Rs. 60,990.19 Crore. Percentage of Gross NPA to Gross Loan Assets was 2.46% and percentage of Net NPA to Gross Loan Assets was 0.02% and percentage of Net NPA to Net Loan Assets was 0.02%.

The Corporation has complied with the regulation of investments prescribed by IRDAI for investment limits in housing and infrastructure and social sector. The compliance has been made on aggregate basis.

11. Confirms that:

i. In the preparation of financial statements, the applicable accounting standards, principles and policies have been followed along with proper explanations relating to material departures.

ii. The management has adopted accounting policies and applied them consistently (including those specifically required by various IRDAI regulations) and made judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Corporation at the end of the financial year and of the operating profit and net profit of the Corporation for the year.

iii. The management has taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the applicable provisions of the Insurance Act, 1938, Insurance Law (Amendment) Act, 2015 (to the extent notified), Companies Act, 2013, for safeguarding the assets of the Corporation and for preventing and detecting fraud and other irregularities.

iv. The financial statements are prepared on a going concern basis.

v. The management has ensured that an internal audit system commensurate with the size and nature of the business exists and is operating effectively.

12. Certifies that no payment has been made to individuals, firms, companies and organisations in which the Directors of the Corporation are interested.

	For and on behalf of the Board of Directors
	Sd/-
	(Devesh Srivastava)
Date: 25.05.2023	Chairman and Managing Director