MIRA
INFORM REPORT
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Report Date : |
17.06.2011 |
IDENTIFICATION DETAILS
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Name : |
GENERAL INSURANCE CORPORATION OF |
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Registered Office : |
"Suraksha", 170, |
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Country : |
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Financials (as on) : |
31.03.2010 |
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Date of Incorporation : |
22.11.1972 |
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Com. Reg. No.: |
016133 |
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Paid-up Capital : |
Rs. 4300.000 Millions |
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CIN No.: [Company
Identification No.] |
U67200MH1972GOI016133 |
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TAN No.: [Tax
Deduction & Collection Account No.] |
MUMG00151E |
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PAN No.: [Permanent
Account No.] |
AAACG0615N |
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Legal Form : |
Government of |
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Line of Business : |
Providing Insurance Services. |
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No. of Employees : |
439 (approximately) |
RATING & COMMENTS
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MIRA’s Rating : |
Aa (76) |
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RATING |
STATUS |
PROPOSED CREDIT LINE |
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71-85 |
Aa |
Possesses adequate working capital. No caution needed for credit
transaction. It has above average (strong) capability for payment of interest
and principal sums |
Large |
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Status : |
Excellent |
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Payment Behaviour : |
Regular |
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Litigation : |
Clear |
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Comments : |
Subject is a well established and a reputed Insurance Corporation
having excellent track. Financial position of the corporation is sound.
Fundamentals are strong and healthy. Directors are reported to be experienced and respectable businessmen.
Trade relations are reported as fair. Business is active. Payments are
reported to be regular and as per commitments. The subject can be considered normal for business dealings at usual
trade terms and conditions. It can be regarded as a promising business partner in medium to long
run. |
NOTES :
Any query related to this report can be made
on e-mail : infodept@mirainform.com
while quoting report number, name and date.
INFORMATION DENIED BY
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Name : |
Mr. R. C. Bala |
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Designation : |
Accounts Manager |
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Date : |
16.06.2011 |
LOCATIONS
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Registered/ Head Office : |
"Suraksha",
170, |
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Tel. No.: |
91-22-22867000
(Board) |
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Fax No.: |
91-22-22899600 |
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E-Mail : |
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Website : |
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Branch Office : |
Located at: |
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Representative Office : |
Located at: |
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Regional Office : |
Located at:
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DIRECTORS
As On 31.03.2010
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Name : |
Mr. Yogesh Lohiya |
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Designation : |
Chairman-cum-Managing Director (w.e.f 28.05.2007) |
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Date of Birth/Age : |
59 Years |
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Qualification : |
B.E. (Hons) AIII, Dipolma In Business Management |
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Name : |
Mr. Tarun Bajaj , IAS |
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Designation : |
Director |
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Name : |
Mr. M. V. Nair |
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Designation : |
Director (w.e.f 19.08.2009) |
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Name : |
Mr. S. B. Mathur |
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Designation : |
Director (w.e.f 23.12.2009) |
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Name : |
Mr. S. L. Mohan |
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Designation : |
Director (w.e.f 23.12.2009) |
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Name : |
Mrs. Bhagyam Ramani |
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Designation : |
Director and General Manager |
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Name : |
Mr. G. Srinivasan |
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Designation : |
Director |
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Name : |
Mr. T.S. Vijayan |
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Designation : |
Director (upto 10.05.2009) |
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Name : |
Mr. O.P. Bhatt |
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Designation : |
Director (upto 05.09.2009) |
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Name : |
Mr. M. Ramadoss |
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Designation : |
Director |
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Name : |
Mr. M.B.N. Rao |
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Designation : |
Director (upto 30.06.2008) |
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Name : |
Mr. T. S. Narayanansami |
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Designation : |
Director (upto 31.05.2009) |
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Name : |
Mr. Kamlesh Shivji Vikamsey |
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Designation : |
Director |
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Name : |
Mr. M. V. Rajeev Gowda |
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Designation : |
Director |
KEY EXECUTIVES
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Name : |
Mr. M. Ramaprasad |
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Designation : |
General Manager |
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Name : |
Mr. A K Roy |
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Designation : |
General Manager (w.e.f.
23.06.2008) |
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Name : |
Mr. R Raghavan |
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Designation : |
General Manager |
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Name : |
Mr. Sujay Banarji |
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Designation : |
General Manager |
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Name : |
Mr. P K Bhagat |
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Designation : |
Deputy General Manager |
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Name : |
Mr. H.G. Rokade |
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Designation : |
Deputy General Manager |
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Name : |
Mr. P.N. Gandhi |
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Designation : |
Deputy General Manager |
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Name : |
Mr. A K Mittal |
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Designation : |
Deputy General Manager (w.e.f.
11.08.2008) |
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Name : |
Mrs. Alice Vaidyan |
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Designation : |
Deputy General Manager (w.e.f.
31.07.2008) |
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Name : |
Mr. Y Ramulu |
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Designation : |
Deputy General Manager (w.e.f.
11.08.2008) |
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Name : |
Mr. H L Teckchandani |
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Designation : |
Deputy General Manager (w.e.f. 18.08.2008) |
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Name : |
Mr. R. Sundaram |
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Designation : |
Deputy General Manager |
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Name : |
Mr. Sundar Nallakuttalam |
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Designation : |
Deputy General Manager and Chief Vigilance
Officer |
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Name : |
Mr. Ashwani Kumar |
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Designation : |
Deputy General Manager |
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Name : |
Mrs. Gopa Ray |
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Designation : |
Chief Vigilance Officer |
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Name : |
Mrs. Suchita Gupta |
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Designation : |
Company Secretary |
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Name : |
Mr. Anil Sant |
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Designation : |
Assistant General Manager (w.e.f
01.07.1986) |
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Date of Birth/Age : |
47 Years |
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Qualification : |
B.Sc, B.Sc9IT), FIII |
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Name : |
Mr. J.R. Wankhede |
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Designation : |
Chief Manager (w.e.f 01.07.1988) |
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Date of Birth/Age : |
53 Years |
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Qualification : |
D.E. (C), FIII |
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Name : |
Mr. D.R. Arya |
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Designation : |
Chief Manager (w.e.f 27.11.1989) |
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Date of Birth/Age : |
45 Years |
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Qualification : |
M.Sc (Agri), Master Degree in HRDM |
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Name : |
Mr. Sanjay Mokashi |
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Designation : |
Senior Manager (w.e.f 01.06.1990) |
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Date of Birth/Age : |
42 Years |
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Qualification : |
M.Com Licentiate |
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Name : |
Mr. Rajesh Laheri |
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Designation : |
Deputy Manager (w.e.f 17.04.1998) |
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Date of Birth/Age : |
42 Years |
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Qualification : |
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Name : |
Mr. R. C. Bala |
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Designation : |
Accounts Manager |
MAJOR SHAREHOLDERS / SHAREHOLDING PATTERN
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Names of Shareholders |
No. of Shares |
Percentage of
Holding |
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Indian Promoters |
43000000 |
100.00 |
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Total |
43000000 |
100.00 |
BUSINESS DETAILS
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Line of Business : |
Providing Insurance Services. |
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Products : |
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GENERAL INFORMATION
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No. of Employees : |
439 (approximately) |
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Bankers : |
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Banking
Relations : |
-- |
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Auditors : |
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Name : |
S R Goyal and Company Chartered Accountants |
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Address : |
1, Asangram Colony, C-Scheme, Jaipur – 302 001, |
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Associates : |
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CAPITAL STRUCTURE
As On 31.03.2010
Authorised Capital :
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No. of Shares |
Type |
Value |
Amount |
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100000000 |
Equity Shares |
Rs.100/- each |
Rs.10000.000 millions |
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Issued, Subscribed &Called-up Capital :
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No. of Shares |
Type |
Value |
Amount |
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43000000 |
Equity Shares |
Rs.100/-
each |
Rs.4300.000
millions |
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[Includes 40600000 shares issued by
capitalization of Capital Redemption Reserve and General Reserve and 500000
partly paid shares (Rs.50 per share paid) made fully paid up shares by
capitalization of General Reserve]
FINANCIAL DATA
[all figures are
in Rupees Millions]
ABRIDGED BALANCE
SHEET
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Particulars |
31.03.2010 |
31.03.2009 |
31.03.2008
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SOURCES OF FUNDS |
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Share Capital |
4300.000 |
4300.000 |
4300.000 |
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Reserve and Surplus |
85965.715 |
73533.394 |
62537.681 |
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Deferred Tax Liability |
0.000 |
19.127 |
0.000 |
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Fair Value change Account |
170284.627 |
60747.417 |
142874.276 |
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Total |
260550.342 |
138599.938 |
209711.957 |
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APPLICATION OF
FUNDS |
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Investments |
335739.301 |
209947.118 |
285137.803 |
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Loans |
6951.498 |
7193.180 |
6801.682 |
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Fixed Assets |
446.480 |
436.144 |
410.244 |
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Deferred Tax Asset |
753.506 |
0.000 |
1394.372 |
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Current Assets: |
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Cash & Bank Balance |
27731.148 |
31327.002 |
25275.891 |
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Advances & Other Assets |
66799.390 |
51292.939 |
41108.336 |
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Sub total (A) |
94530.538 |
82619.941 |
66384.227 |
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Sundry Creditors |
1622.715 |
1551.530 |
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Other Current Liabilities |
121347.723 |
112852.860 |
100470.564 |
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Provisions |
54900.543 |
47192.055 |
49945.807 |
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Sub total (B) |
177870.981 |
161596.445 |
150416.371 |
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Net Current Assets (C )=(A-B) |
(83340.443) |
(78976.504) |
(84032.144) |
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Total |
260550.342 |
138599.938 |
209711.957 |
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CONTINGENT LIABILTIES |
17300.930 |
4610.842 |
2243.666 |
PROFIT & LOSS
ACCOUNT
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Particulars |
31.03.2010 |
31.03.2009 |
31.03.2008
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1. Operating Profit / Loss(-) |
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( a ) Fire Insurance |
3277.068 |
(387.158) |
(2303.058) |
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( b ) Marine Insurance |
2631.188 |
(707.751) |
(1919.679) |
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( c ) Miscellaneous Insurance |
(824.557) |
10236.785 |
7776.245 |
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( d ) Life Insurance |
48.499 |
93.209 |
45.349 |
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2. Income from investment |
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( a ) Interest , Dividend & Rents - Gross |
5120.083 |
4686.547 |
4061.412 |
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( b ) Profit on |
3092.662 |
1814.540 |
3394.631 |
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3. Other Income : |
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( a ) Profit on Exchange |
0.000 |
1874.134 |
0.000 |
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( b ) Profit on sale of Assets ( Net) |
0.106 |
0.366 |
0.231 |
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( c ) Interest on Income-tax Refund |
1856.404 |
130.845 |
196.234 |
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( d ) Motor Pool Services Charges |
331.922 |
738.967 |
485.564 |
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( e ) Miscellaneous Receipts |
12.308 |
26.027 |
29.279 |
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Total ( A ) |
15545.683 |
18506.511 |
11766.208 |
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4. Provision for Doubtful Loans, Investment &
Debts |
(143.775) |
(13.066) |
(94.490) |
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5. Amortisation of premium on Investments |
254.403 |
296.921 |
338.864 |
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6. Diminution in the value of investments written
off |
130.284 |
97.725 |
65.731 |
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7. Other Expense : |
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( a ) Expenses relating to Investments |
14.519 |
11.198 |
14.315 |
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( b ) Loss on Exchange |
2383.543 |
0.000 |
735.616 |
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( c ) Sundry Balances Written off ( Net ) |
0.000 |
0.008 |
2.422 |
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( d ) Loss on Distribution of LPA Assets |
0.000 |
(2.160) |
30.793 |
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( e ) Interest on Service Tax |
4.688 |
0.000 |
0.000 |
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Total ( B ) |
2643.662 |
390.626 |
1093.251 |
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Profit Before Tax |
12902.021 |
18115.885 |
10672.957 |
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Provision for Taxation : |
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( a ) Current Tax |
1701.194 |
3915.860 |
1474.353 |
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( b ) Wealth Tax |
1.559 |
1.259 |
0.050 |
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( c ) Deferred Tax |
(772.626) |
(219.846) |
(740.742) |
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( d ) Fringe
benefit tax |
(5.032) |
18.500 |
11.470 |
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Provision for Tax in respect of earlier years |
(5769.139) |
328.159 |
0.000 |
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Profit after Tax |
17746.065 |
14071.953 |
9927.826 |
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Balance brought forward from last year |
0.071 |
0.128 |
0.462 |
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Profit available for appropriation |
17746.136 |
14072.081 |
9928.288 |
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Appropriations |
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( a ) Proposed Dividend |
3526.000 |
2795.000 |
1978.000 |
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( b ) Dividend Distribution Tax |
585.625 |
475.010 |
336.161 |
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( c ) Transfer to General Reserve |
13633.901 |
10802.000 |
7614.000 |
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Balance carried forward to Balance Sheet |
0.610 |
0.071 |
0.127 |
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|
17746.136 |
14072.081 |
9928.288 |
LOCAL AGENCY FURTHER INFORMATION
The Details of
sundry Creditors:
Rs.
In Millions
|
Particulars |
31.03.2010 |
31.03.2009 |
31.03.2008
|
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Sundry Creditors |
1622.715 |
1551.530 |
NA |
HISTORY:
The entire general insurance business in
Subject was formed in pursuance of Section 9(1) of GIBNA. It was incorporated
on 22 November 1972 under the Companies Act, 1956 as a private company limited
by shares. GIC was formed for the purpose of superintending, controlling and
carrying on the business of general insurance.
As soon as GIC was formed, GOI transferred all the shares it held of the
general insurance companies to GIC. Simultaneously, the nationalised
undertakings were transferred to Indian insurance companies. After a process of
mergers among Indian insurance companies, four companies were left as fully
owned subsidiary companies of GIC (1) National Insurance Company Limited, (2)
The New India Assurance Company Limited, (3) The Oriental Insurance Company
Limited, and (4) United India Insurance Company Limited
The next landmark happened on 19th April 2000, when the Insurance Regulatory
and Development Authority Act, 1999 (IRDAA) came into force. This act also
introduced amendment to GIBNA and the Insurance Act, 1938. An amendment to
GIBNA removed the exclusive privilege of GIC and its subsidiaries carrying on
general insurance in
In November 2000, GIC is renotified as the Indian Reinsurer and through administrative
instruction, its supervisory role over subsidiaries was ended.
With the General Insurance Business (Nationalisation) Amendment Act 2002 (40 of
2002) coming into force from 21.03.2003 GIC ceased to be a holding company of
its subsidiaries. Their ownership were vested with Government of India
The functioning of GIC has to be within the regulations of the following
major Acts:
The Companies Act, 1956
Insurance Act, 1938
General Insurance Business (Nationalisation) Act, 1972
General Insurance Business (Nationalisation) Amendment Act. 2002.
Insurance Regulatory and Development Authority Act, 1999
DOMESTIC
REINSURANCE BUSINESS:
As a sole reinsurer in the domestic reinsurance market, GIC provides
reinsurance to the direct general insurance companies in the Indian market. GIC
receives statutory cession of 10% on each and every policy subject to certain
limits. It leads many of domestic companies’ treaty programmes and facultative
placements. GIC’s capacity for each class of business on Treaty and Facultative
basis for domestic business.
INTERNATIONAL
REINSURANCE BUSINESS:
A GIC is spreading its wings to emerge as an effective reinsurance
solutions partner for the Afro-Asian region and has started leading the
reinsurance programmes of several insurance companies in SAARC countries, South
East Asia, Middle East and
PRESS RELEASES:
A.M. Best Company reaffirms A -(Excellent) Rating to GIC Re
Founded in 1899, A.M. Best Company is a global credit rating
organization catering to the insurance and reinsurance companies globally. A.M.
Best Company has affirmed the Financial Strength Rating of A- (Excellent) and
the Issuer Credit Rating of a- of General Insurance Corporation of
The ratings reflect GIC Re’s adequate risk-adjusted capitalization,
improved underwriting performance and strong market presence. GIC Re’s
risk-adjusted capitalization as demonstrated by Best’s Capital Adequacy Ratio
(BCAR) supports its current rating level.
As mentioned by A. M. Best Company in the rating rationale, GIC Re’s
underwriting performance improved over the past two years. As the sole domestic
reinsurer in
BOARD OF DIRECTORS:
Shri M.V. Nair,
Chairman and Managing Director, Union Bank of
was appointed as a
Director on the Board of the Corporation w.e.f. 19.08.2009.
Smt. Bhagyam
Ramani, General Manager, General Insurance Corporation of
on the Board of
the Corporation w.e.f. 11.11.2009. Shri S.B. Mathur, Secretary General, Life
Insurance Council of
Shri S.L. Mohan,
Secretary General, General Insurance Council of
Shri O.P. Bhatt,
Chairman, State Bank of
The Directors wish
to place on record the co-operation received from Shri O.P. Bhatt during his
tenure as
Director on the
Board and also for his valuable contribution to the cause of the General
Insurance Industry.
IMPLEMENTATION OF OFFICIAL LANGUAGE POLICY OF THE
CENTRAL GOVERNMENT
During the year,
the Corporation improved its performance in implementation of Official Language
Policy of the Government of India and complied with the guidelines issued by
the Ministry. For implementation of Official Language Policy of the Government,
inspections of various departments of the Corporation were carried out by the
officials of Official Language Department. Five In-House workshops were
organized and four meetings of Official Language Implementation Committee were
conducted during the year.
In-house quarterly
journal KSHITIJ was published regularly on quarterly basis. During Hindi week
celebrations, various competitions were held. The winners of these competitions
were awarded in an awards function. CMD's Shield was awarded to the best
performing Department of the Corporation with regard to Official Language
Implementation.
The Deputy
Director (Rajbhasha), Ministry of Home Affairs, Mumbai carried out an
inspection and found that the implementation of Official Language in the
Corporation was satisfactory. During the year, GIC Re was awarded third prize
for progressive use of Official Language, by TOLIC (Town Official Language
Implementation Committee, Mumbai).
OVERSEAS OPERATIONS:
GIC Re has 3
overseas offices viz: a Representative Office in
The Corporation
has exposure in the share capital of Kenindia Assurance Company Limited, Kenya,
India International Insurance Pte Limited,
During the year
2009-10, the Gross Premium written by the Branch increased from GBP 22.780
million in the previous year to GBP 31.020 million and profit after tax was GBP
2.903 million.
During the current
financial year 2009-10, the Gross Premium written by the Branch increased from
AED 403.760 million to AED 782.440 million. The operations resulted into a
marginal loss of AED 0.300 million.
KENINDIAASSURANCE
The paid up share
capital of the Company is Kshs 362 million. With a view to comply with the
statutory directive of the Insurance Regulatory Authority of Kenya as to
minimum capital requirement, the Company declared issue of bonus shares in the
ratio of 4 shares for every 14 ordinary shares held. The Corporation's holding
in the share capital of the Company is 9.2%.
Due to stringent
methods adopted by the management, the performance of the Company has further
improved during the year.
The Corporation
holds 20% shares in India International Insurance Pte. Limited, which has a
share capital of S$ 25 million. The Company has declared a dividend of 7.5 %
for the financial year 2009, as in the previous years.
LIC (
The Corporation
has a 30% holding in the share capital of LIC (
ASIAN REINSURANCE
CORPORATION,
The Corporation is
holding 21.34% of the share capital as Associate Member of Asian Re in addition
to holding 3.35% of the share capital as its Regular Member on behalf of the
Government of India. Performance of the Company improved considerably with a net
operating profit of US$ 1.390 million as against a net loss of US$ 1.520
million in 2008. The Company declared a cash dividend of 2.75 % for the year
2009.
EAST AFRICA REINSURANCE
COMPANY LIMITED,
The Corporation
has 14.75% stake in the share capital of East Africa Reinsurance Company
Limited, an existing profit making reinsurance company in
During the year,
bonus shares amounting to Shs 50 million were issued to the existing
Shareholders in the proportion of one new share for every twelve existing
shares, thus increasing the paid up share capital to Shs 650 million from Shs
600 million. The Company declared a dividend at Kshs 31 per share (3.1%) on the
increased share capital for the year 2009.
MANAGEMENT’S DISCUSSION AND ANALYSIS REPORT
ECONOMIC ENVIRONMENT
Recovery in the
global economy picked up momentum in the fourth quarter of 2009. The speed of
recovery however, remains significantly divergent. The projection for global
output of 2010 generally points to consolidating recovery, led by Emerging
Market Economies (EMEs). The risks to the overall global macroeconomic
environment have, however, increased because of the large public debt in
advanced economies, on the back of concerns relating to reduction in potential
output, high unemployment rates, impaired financial systems and premature exit
from the policy stimulus.
The turnaround in
global macroeconomic conditions is reflected in the turnaround in
With the improving
growth outlook, monetary and fiscal exit measures have started. While recovery
in private demand needs to be stronger to reinforce the growth momentum, the
already elevated headline inflation suggests that the weight of policy balance
may have to shift to containing inflation, since high inflation itself will
dampen recovery in growth. In the emerging macro economic scenario, monetary
policy management in 2010-11 will be dominated by the challenge of moderating
inflation and anchoring inflation expectations, while remaining supportive of
growth
INDIAN INSURANCE SECTOR DEVELOPMENTS:
In 2009-10 the
domestic general insurance industry, comprising three stand alone Health
insurance companies, one Agriculture Insurance Company, one Export and Credit
Guarantee Insurance Company and fifteen private sector general insurance
companies besides the four public sector general insurance companies bounced
back and recovered very well and posted excellent growth rates after the slow
down due to the global economic crisis of 2008. The life insurance industry
also registered impressive growth performance.
The general
insurance business clocked a gross premium of over Rs. 350000.000 millions in
2009-10 registering a growth of 13.5% over 2009-10 which was 9% in 2008-09.
Detariffication in 2007 coupled with intense competition and discounted pricing
has strained the underwriting profits of many of the general insurance
companies. However, thanks to their investment incomes most of the companies
have been able to record profits. The surge in general insurance premium has
been primarily due to the outstanding growth registered in the Motor and Health
portfolios.
With the boom in
automobile manufacturing and sales the motor portfolio has performed remarkably
well. The segment has registered a growth of almost 42 percent in 2009-10. The
growing health consciousness amongst Indians and also the rising cost of
medical care is the driving force behind the spurt in the health portfolio. It
has become one of the fastest growing segments in the general insurance
industry in the country today. The portfolio registered a growth of around 23
percent in 2009-10.
The Insurance
Industry in
During the year
two new companies SBI General Insurance Company and Max Bupa Health Insurance
Company commenced business in the general insurance sector in the country.
Indian markets continue to be attractive for International reinsurers as they
have a good record of low catastrophic events and also low penetration. Indian
companies were able to place their programmes with the global reinsurers with
ease. Though following detariffication the pricing has fallen abysmally low,
still the global reinsurers are very well aware that things get back on rails
sooner than later and they stand to gain once the market sees some kind of
discipline setting in.
GIC Re's BUSINESS PERFORMANCE:
During 2009-10 the
Corporation notched up a remarkable improvement in the foreign business with a
growth rate of 39%. The premium growth in the domestic market was at 9.4%. The
Corporations gross premium income during the year 2009-10 is Rs. 97369.200 millions
and the income, during the year from investments was registered at Rs.
20402.500 millions. Underwriting results show an overall loss of Rs. 7801.900
millions in 2009-10 compared to an underwriting loss of Rs. 2133.600 millions
in the previous year. The ratio of total business expenses to the earned
Premium i.e. Combined Ratio stood at 109.64%. The Solvency margin of the
Corporation as on 31.03.2010 was 3.71.
CLASS WISE PERFORMANCE:
FIRE:
Fire business
recorded a growth of 23%. The earned premium for the year was Rs. 23610.000
millions as compared to Rs. 19130.000 millions the previous year.
The domestic
premium dropped by 4% (Rs. 6340.000 millions from Rs. 66100.000 millions).The
primary reason for de-growth of domestic premium is due to rates continuing to
be thin following detariffication.
GIC Re's foreign
inward business grew by 38% (Rs. 17280.000 millions from Rs. 12520.000
millions). This growth is in keeping with GIC Re’s goal of achieving a 50-50
portfolio between domestic and foreign by 2014. This is as a result of
aggressive marketing, enhanced contribution by foreign branches and shifting
focus from being a regional reinsurer to a global reinsurer. The retro business
of the Company has also contributed to this growth. Incurred claims stood at
Rs. 16360.000 millions. The major losses in
MARINE CARGO:
Whilst the Cargo
Gross Premiums for 2009-10 have increased by about 5% over 2008-09, the Net
Earned premiums for 2009-10 have gone down marginally to Rs. 3021.600 Millions
from Rs. 3142.200 Millions in 2008-09. This decline is in account of adjustment
made in reserve for unexpired risks.
Project cargo
reinsurance for power plans with related consequential loss cover continue to
see good volume. On the treaty side, however, it appears unlikely that actual
premiums for 2009-10 will achieve the premium level estimated by insurers,
mainly on account of residual effects of the economic slowdown.
Cargo rates have
largely stabilized except for oil shipments which due to good experience are
very aggressively quoted by the larger insurers. No major losses have been
reported during the year. The overall loss ratio has come down from 75%
(2008-09) to 60% (2009-10).
The outlook for
2010-11 appears positive
MARINE
The Marine Hull
gross premium (excluding Offshore energy) showed a downward trend of 15% in
gross premium volume in comparison to the gross premium figures of last year.
This is mainly on account of increased capacity of the domestic players, lower
tonnage, competitive pricing, economic recession witnessed last year and
overall softer Reinsurance market.
The loss in
premium volume is compensated by better underwriting practices, imposing age
restrictions and deductibles, better rates in domestic and foreign quotes.
No major losses have
been reported last year. This has resulted in the reduction in incurred loss
figures in Marine Hull portfolio from 140% (2008-09) to 65% (2009-10).
GIC Re of India
continues to administer the Govt. of India Hull War Risk Scheme for Indian Flag
Vessels as also the Marine Hull Pool. It is observed that generally the ship
owners prefer the Institute London War Risk Scheme which, though restrictive in
coverage is cheaper than the GOI War Risk Scheme. Efforts are on to include the
same into our portfolio.
OIL AND ENERGY
GIC Re's Offshore
energy business continues to show a healthy growth year on year both in
domestic and international business. Offshore energy premium written in Marine
and accounted for during 2009-10 is US$ 39 mln. vis a vis US$ 32 mln in 2008-09
(an increase of 21%). This includes the premium from
GIC Re's quick
turnaround of proposals received and timely claims settlement have been well
appreciated in that foreign energy business accounts for 60% of the overall
energy portfolio. There have been two large offshore losses reported during the
year in the domestic market as under: L and T (construction) 07.05.09 – US$ 20
mln.: GIC Re’s share US$ 2 mln. Reliance Industries 03.10.09 – US$ 75 mln.: GIC
Re’s share US$ 7.5 mln.
The outlook for
2010-11 appears positive.
AVIATION
PERFORMANCE 2009-10:
Airline insurance
market, in continuous softening trend since 2002, started showing some signs of
hardening during the second half of 2008 and first half of 2009. The marginal
hardening trend in the market was decisively influenced by the Air France loss
(date of loss 01.06.2009). Air
Gross premium at
Rs. 6197.800 millions registered a growth of 3.2%. Net Premium for 2009-10 was
Rs. 4665.800 millions as compared to Rs. 5000.500 millions for 2008-09
registering ade-growth of 6.69%. This was on account of higher retrocession
premium. Earned Premium for 2009-10 was Rs. 4810.300 millions as compared to
Rs. 4036.400 millions for 2008-09 registering a growth of 19.17%.
Low incurred claims ratio of 60.00% of earned
premium was on account of reserve release and reversal of claims provisioning.
GIC Re's net
losses from large airline accidents for the year amounted to Rs. 1032.300
millions. The largest loss was Air France (Date of Loss 01.06.2009) for Rs.
1074.800 gross for GIC Re share of 3.5% (Rs. 270.000 millions net after
recovery). The other major loss for the Corporation was Ethiopian Airlines with
Corporation's gross exposure at Rs. 484.100 millions.
LIABILITY:
Worldwide scenario:
Recession globally
had a wide impact on awareness of liability Insurance. The financial meltdown
has led to increase in shareholder activism and also Professional Indemnity
claims against Financial Institutions, Banks and Corporate. As the world
economy started to recover, increased investment activity was seen in the
emerging markets. Overall Liability Insurance rate worldwide has continued to
see an increased movement as compared to the previous year.
Indian Market:
On the domestic
side as well, awareness for Liability insurance covers continued to increase
over the past years. Growth in demand for liability covers were felt more as a
“need” rather than merely meeting legal requirement. Claim notifications that various
lines of Liability Insurance business have seen recently helped increase rate
of Liability covers. Owing to consistent growth and a profitable portfolio,
this segment is in great demand for insurance companies in Indian market.
GIC Re played an
important role in providing suitable Treaty capacities to the Indian market.
Companies / brokers, adhering to IRDA guidelines, for allowing first right of
refusal, helped GIC Re get opportunity to write accounts which were backed by
Reinsurers located abroad. This resulted in considerable growth in Liability
book of business i.e. 40.9% over the previous year.
Besides growth in
business, GIC Re also noticed quite a few loss incidents / notification
reported particularly in primary policies of Tech E and O accounts and Product
recall covers of Auto companies. Satyam D and O policy of 2008-09 for which
loss notification was reported last year, Companies made provision in a big way
which in turn impacted GIC Re results as well.
Keeping in view
sustained growth in Liability Class, GIC Re will continue to provide need based
capacities for growth of its portfolio and market.
LIFE REINSURANCE:
Life Insurance
market in the country has grown 18% in 2009-10. However, Life Reinsurance
market is growing gradually. Net Written Premium of the Corporation has
increased to Rs. 140.300 millions from Rs. 117.300 millions in 2008-09, a
growth of 19.50%. However, the earned premium and revenue profit have reduced
in 2009-10 to Rs. 128.800 millions and Rs. 48.500 millions respectively as
compared to Rs. 145.300 millions and Rs. 59.200 millions respectively for the
previous year due to reserve strain.
GIC Re and
Hannover Re have a cooperation agreement for development of Life Reinsurance
business in
AGRICULTURAL REINSURANCE:
GIC Re continued
its Agriculture Reinsurance portfolio during the year by providing reinsurance
support for agriculture (Crop/Livestock) and index based weather insurance
under proportional, stop loss and facultative arrangements.
GIC Re's
Agriculture portfolio is well diversified and consists of business from
The net
Reinsurance premium increased from Rs. 197.600 millions in 2008-09 to Rs.
1229.900 millions in 2009-10 showing a growth rate of 522.42%. The incurred
claim for the year was Rs. 669.500 millions giving a claim ratio of 54.44%.
CREDIT RATING:
International
rating agency AM Best has maintained the Corporation's rating at “A” -
(Excellent). The rating reflects excellent risk adjusted capitalization and leading
business position in Indian market with the offsetting factor being reliance on
investment income from portfolio highly concentrated in Indian equity market.
Indian credit rating agency Credit Analysis and Research Limited (CARE) has
reaffirmed AAA (In) Claims Paying Ability rating. Insurers with this rating
have the highest financial strength to meet policyholders' obligations and
impact of any adverse business and economic factors on the claims paying
ability is minimal.
INVESTMENT:
Emerging Market
Economies (EMEs) of
Global financial
markets exhibited significant stabilization despite the drag from the global financial
crisis. However, the volatility increased in the beginning of 2010 due to
concerns about unsustainable financial positions as reflected in sovereign
risks. Episodes such as the Dubai World Debt standstill and the sovereign debt
problems in
During 2009-10
there was a sharp growth in key asset price in
stock to sales
ratio even though that is largely on account of the strong rebound in sales
growth in the third quarter of 2009-10, after a phase of significant
deceleration over the preceding quarters. The corporates resorted to nonbanking
sources such as issuance of Commercial Papers, private placement, IPOs etc.
Market borrowing
of the Central Government increased further during 2009-10 and most of them
were front loaded. The yields on the government bonds hardened after Q1 of
2009-10 reflecting the concerns of stimulus led to large fiscal deficit and
large inflationary expectation. By appropriately releasing liquidity to the
financial system, a relatively smooth conduct of Government's market borrowing
programme was ensured. The gross borrowing in dated securities was at Rs.
4180000.000 millions with weighted average maturity of 11.2 years and weighted average
yield of 7.23%. Based on IRDA guidelines, the Corporation invests 45% in
Directed Sector comprising of Central/State Government Securities, Government
guaranteed bonds, Housing and Infrastructure Sector. Balance 55% is invested in
Market Sector and these investments are subject to prudential and exposure
norms.
The investment
portfolio of the Corporation stood at Rs. 174808.800 millions as against Rs.
167264.700 millions showing an increase of Rs. 7544.100 millions representing a
growth of 4.51 % over the previous year. Income from investments stood at Rs.
20402.500 millions with a mean yield on funds at 11.93%. The net non performing
assets percentage was at 1.59 %.
GIC Re’s Reinsurance Programe
The Corporation
has arranged Risk and Catastrophe Excess of Loss Protection for its net
retained Portfolios in respect of various classes of Business. Separate CAT
protection has been arranged for some territories in respect of Foreign
Business. ART arrangement has been continued covering GIC Re’s retained share
for both domestic and foreign business.
Future Outlook
The Indian
insurance industry is bound to grow in double digits during 2010-11 too, riding
on the back of relatively solid fundamentals that that the Indian economy has
acquired over the years. The emphasis is once again likely to be on the motor
and health portfolios. The infrastructure sector including realty, highways,
new airports, power plants and other megaprojects, is once again in focus. With
the Nuclear Liability Act in place things will look up on that sphere too,
giving an additional boost to a whole lot of activities. The employment
scenario is quite optimistic post financial meltdown and this has brought a
cheer to several other sectors. All these are likely to act as a catalyst and provide
a boost to the property lines. The overall scenario is quite rosy and cheering.
And this should buoy up the insurance sector too.
Contingent
Liabilities: (As on 31.03.2010)
(a) Partly paid up
investments. Rs. Nil (P.Y. Rs. 4.185 millions)
(b) Underwriting
commitments outstanding: Nil. (P.Y. Nil).
(c) Claims, other
than under policies not acknowledged as debts: Nil. (P.Y.Nil).
(d) Guarantees
given by or on behalf of the Corporation Rs. 4,467,634 thousands (P.Y. Rs.
2671.571 millions)
(e) Statutory demand
/ liabilities in dispute - Income-tax demands disputed in appeal, not provided
for Rs. 12.833 millions (P.Y. Rs. 1.935 million)
(f) Reinsurance
obligations to the extent not provided for in the accounts Nil in view of
accounting policy no. 2.1.
(g) Others Nil.
(P.Y. Nil).
FIXED ASSETS:
- Buildings
- Furniture and
Fixtures
- I.T.
Equipments
- Vehicles
- Office
Equipments
- AC and Water
Coolers
- Elevators
- Canteen
Appliances
- Electrical
Installation
- Fire Alarm
Systems
FROM WEBSITE:
BALANCE
SHEET AS AT 31.03.2011
Rs.
In Millions
|
Particulars |
31.03.2011 |
|
SOURCES OF FUNDS |
|
|
Share Capital |
4300.000 |
|
Reserve and Surplus |
93902.190 |
|
Deferred Tax Liability |
|
|
Fair Value change Account |
188177.072 |
|
|
|
|
Total |
286379.262 |
|
APPLICATION OF
FUNDS |
|
|
Investments |
366924.795 |
|
Loans |
5953.935 |
|
Fixed Assets |
448.945 |
|
Deferred Tax Asset |
15.160 |
|
Current Assets: |
|
|
Cash & Bank Balance |
47566.041 |
|
Advances & Other Assets |
76376.758 |
|
Sub total (A) |
123942.799 |
|
Current Liabilities |
147664.245 |
|
Provisions |
63242.127 |
|
Sub total (B) |
210906.372 |
|
Net Current Assets (C )=(A-B) |
(86963.573) |
|
Total |
286379.262 |
|
CONTINGENT LIABILTIES |
10947.692 |
PROFIT & LOSS
ACCOUNT
Rs.
In Millions
|
Particulars |
31.03.2011 |
|
1. Operating Profit / Loss(-) |
|
|
( a ) Fire Insurance |
2469.445 |
|
( b ) Marine Insurance |
1753.333 |
|
( c ) Miscellaneous Insurance |
(1936.959) |
|
( d ) Life Insurance |
40.146 |
|
|
|
|
2. Income from investment |
|
|
( a ) Interest , Dividend & Rents - Gross |
593.945 |
|
( b ) Profit on |
2836.902 |
|
|
|
|
3. Other Income : |
|
|
( a ) Profit on Exchange |
266.297 |
|
( b ) Profit on sale of Assets ( Net) |
0.237 |
|
( c ) Interest on Income-tax Refund |
1194.290 |
|
( d ) Miscellaneous Receipts |
258.193 |
|
|
|
|
Total ( A ) |
12845.829 |
|
|
|
|
4. Provision for Doubtful Loans, Investment &
Debts |
364.256 |
|
5. Amortisation of premium on Investments |
227.330 |
|
6. Diminution in the value of investments written
off |
319.238 |
|
7. Other Expense : |
|
|
( a ) Expenses relating to Investments |
18.319 |
|
( b ) Loss on Exchange |
0.000 |
|
( c ) Sundry Balances Written off ( Net ) |
1.298 |
|
( d ) Loss on Distribution of LPA Assets |
|
|
( e ) Interest on Service Tax |
21.902 |
|
|
|
|
Total ( B ) |
952.343 |
|
|
|
|
Profit Before Tax |
11893.486 |
|
Provision for Taxation : |
|
|
( a ) Current Tax |
2755.000 |
|
( b ) Wealth Tax |
1.916 |
|
( c ) Deferred Tax |
(32.877) |
|
( d ) Fringe
benefit tax |
0.000 |
|
Provision for Tax in respect of earlier years |
(1164.647) |
|
|
|
|
Profit after Tax |
10334.094 |
|
Balance brought forward from last year |
0.610 |
|
|
|
|
Profit available for appropriation |
10334.704 |
|
|
|
|
Appropriations |
|
|
( a ) Proposed Dividend |
2064.000 |
|
( b ) Dividend Distribution Tax |
342.805 |
|
( c ) Transfer to General Reserve |
7927.300 |
|
|
|
|
Balance carried forward to Balance Sheet |
0.599 |
|
|
|
|
|
10334.704 |
REVENUE ACCOUNT FOR THE
YEAR ENDED 31.03.2010
(Rs. in millions)
|
Particulars |
Fire |
Miscellaneous |
Marine |
Life |
||||
|
2009-10 |
2008-09 |
2009-10 |
2008-09 |
2009-10 |
2008-09 |
2009-10 |
2008-09 |
|
|
Current Year |
Previous Year |
Current Year |
Previous Year |
Current Year |
Previous Year |
Current Year |
Previous Year |
|
|
Premium earned (Net) |
23610.852 |
19125.008 |
49829.019 |
52133.030 |
7195.663 |
6658.277 |
128.800 |
145.363 |
|
Profit on sale of investment (Net) |
1327.238 |
744.230 |
2892.107 |
2076.307 |
655.269 |
355.143 |
4.577 |
2.933 |
|
Profit/Loss on Exchange Fluctuation |
(72.787) |
98.987 |
(3.659) |
15.985 |
70.233 |
(26.622) |
(1.978) |
(8.922) |
|
Interest Div & Rent Gross |
2197.320 |
1922.177 |
4788.054 |
5362.631 |
1084.837 |
917.255 |
7.577 |
7.575 |
|
|
|
|
|
|
|
|
|
|
|
Total(A) |
27062.623 |
21890.402 |
57505.521 |
59587.953 |
9006.002 |
7904.053 |
138.976 |
146.949 |
|
|
|
|
|
|
|
|
|
|
|
Claims Incurred(Net) |
16363.786 |
16685.300 |
47482.341 |
38559.647 |
4649.489 |
6887.136 |
68.261 |
39.286 |
|
Commission (Net) |
7169.849 |
5409.070 |
10434.491 |
10395.450 |
1676.874 |
1673.710 |
21.249 |
13.521 |
|
Operating Expenses related to Insurance Business |
245.689 |
178.597 |
399.669 |
383.258 |
45.375 |
48.767 |
0.946 |
0.915 |
|
Expenses relating to Investments |
6.231 |
4.593 |
13.577 |
12.813 |
3.076 |
2.191 |
0.021 |
0.018 |
|
|
|
|
|
|
|
|
|
|
|
Total(B) |
23785.555 |
22277.560 |
58330.078 |
49351.168 |
6374.814 |
8611.804 |
90.477 |
53.740 |
|
|
|
|
|
|
|
|
|
|
|
Operating
Profit/Loss from Business C =(A-B) |
3277.068 |
(387.158) |
(824.557) |
10236.785 |
2631.188 |
(707.751) |
48.499 |
93.209 |
|
|
|
|
|
|
|
|
|
|
|
APPROPRIATIONS |
|
|
|
|
|
|
|
|
|
Transfer to
Shareholders Account |
3277.068 |
(387.158) |
(824.557) |
10236.785 |
2631.188 |
(707.751) |
48.499 |
93.209 |
|
Total (C) |
3277.068 |
(387.158) |
(824.557) |
10236.785 |
2631.188 |
(707.751) |
48.499 |
93.209 |
CMT REPORT (Corruption, Money Laundering & Terrorism]
The Public Notice information has been collected from various sources including
but not limited to: The Courts,
1] INFORMATION ON
DESIGNATED PARTY
No records exist designating subject or any of its beneficial owners,
controlling shareholders or senior officers as terrorist or terrorist organization
or whom notice had been received that all financial transactions involving
their assets have been blocked or convicted, found guilty or against whom a
judgement or order had been entered in a proceedings for violating
money-laundering, anti-corruption or bribery or international economic or
anti-terrorism sanction laws or whose assets were seized, blocked, frozen or
ordered forfeited for violation of money laundering or international
anti-terrorism laws.
2] Court Declaration :
No records exist to suggest that subject is
or was the subject of any formal or informal allegations, prosecutions or other
official proceeding for making any prohibited payments or other improper
payments to government officials for engaging in prohibited transactions or
with designated parties.
3] Asset Declaration :
No records exist to suggest that the property or assets of the subject
are derived from criminal conduct or a prohibited transaction.
4] Record on Financial
Crime :
Charges or conviction
registered against subject: None
5] Records on Violation of
Anti-Corruption Laws :
Charges or
investigation registered against subject: None
6] Records on Int’l
Anti-Money Laundering Laws/Standards :
Charges or
investigation registered against subject: None
7] Criminal Records
No
available information exist that suggest that subject or any of its principals
have been formally charged or convicted by a competent governmental authority
for any financial crime or under any formal investigation by a competent government
authority for any violation of anti-corruption laws or international anti-money
laundering laws or standard.
8] Affiliation with
Government :
No record
exists to suggest that any director or indirect owners, controlling
shareholders, director, officer or employee of the company is a government
official or a family member or close business associate of a Government
official.
9] Compensation Package :
Our market
survey revealed that the amount of compensation sought by the subject is fair
and reasonable and comparable to compensation paid to others for similar
services.
10] Press Report :
No press reports / filings exists on
the subject.
CORPORATE GOVERNANCE
MIRA INFORM as part of its Due Diligence do provide comments on
Corporate Governance to identify management and governance. These factors often
have been predictive and in some cases have created vulnerabilities to credit
deterioration.
Our Governance Assessment focuses principally on the interactions
between a company’s management, its Board of Directors, Shareholders and other
financial stakeholders.
CONTRAVENTION
Subject is not known to have contravened any existing local laws,
regulations or policies that prohibit, restrict or otherwise affect the terms
and conditions that could be included in the agreement with the subject.
FOREIGN EXCHANGE RATES
|
Currency |
Unit
|
Indian Rupees |
|
US Dollar |
1 |
Rs.44.90 |
|
|
1 |
Rs.72.54 |
|
Euro |
1 |
Rs.63.39 |
SCORE & RATING EXPLANATIONS
|
SCORE FACTORS |
RANGE |
POINTS |
|
HISTORY |
1~10 |
7 |
|
PAID-UP CAPITAL |
1~10 |
8 |
|
OPERATING SCALE |
1~10 |
9 |
|
FINANCIAL CONDITION |
|
|
|
--BUSINESS SCALE |
1~10 |
9 |
|
--PROFITABILIRY |
1~10 |
9 |
|
--LIQUIDITY |
1~10 |
9 |
|
--LEVERAGE |
1~10 |
8 |
|
--RESERVES |
1~10 |
9 |
|
--CREDIT LINES |
1~10 |
8 |
|
--MARGINS |
-5~5 |
- |
|
DEMERIT POINTS |
|
|
|
--BANK CHARGES |
YES/NO |
NO |
|
--LITIGATION |
YES/NO |
NO |
|
--OTHER ADVERSE INFORMATION |
YES/NO |
NO |
|
MERIT POINTS |
|
|
|
--SOLE DISTRIBUTORSHIP |
YES/NO |
NO |
|
--EXPORT ACTIVITIES |
YES/NO |
NO |
|
--AFFILIATION |
YES/NO |
YES |
|
--LISTED |
YES/NO |
NO |
|
--OTHER MERIT FACTORS |
YES/NO |
YES |
|
TOTAL |
|
76 |
This score serves as a reference to assess SC’s credit risk and
to set the amount of credit to be extended. It is calculated from a composite
of weighted scores obtained from each of the major sections of this report. The
assessed factors and their relative weights (as indicated through %) are as
follows:
Financial
condition (40%) Ownership
background (20%) Payment
record (10%)
Credit history
(10%) Market trend
(10%) Operational
size (10%)
RATING EXPLANATIONS
|
RATING |
STATUS |
PROPOSED CREDIT LINE |
|
|
>86 |
Aaa |
Possesses an extremely sound financial base with the strongest
capability for timely payment of interest and principal sums |
Unlimited |
|
71-85 |
Aa |
Possesses adequate working capital. No caution needed for credit transaction.
It has above average (strong) capability for payment of interest and
principal sums |
Large |
|
56-70 |
A |
Financial & operational base are regarded healthy. General unfavourable
factors will not cause fatal effect. Satisfactory capability for payment of
interest and principal sums |
Fairly Large |
|
41-55 |
Ba |
Overall operation is considered normal. Capable to meet normal
commitments. |
Satisfactory |
|
26-40 |
B |
Capability to overcome financial difficulties seems comparatively
below average. |
Small |
|
11-25 |
Ca |
Adverse factors are apparent. Repayment of interest and principal sums
in default or expected to be in default upon maturity |
Limited with full
security |
|
<10 |
C |
Absolute credit risk exists. Caution needed to be exercised |
Credit not
recommended |
|
- |
NB |
New Business |
- |
This report is issued at your request without any
risk and responsibility on the part of MIRA INFORM PRIVATE LIMITED (MIPL)
or its officials.