Latest news with #RamaswamyNarayanan
Mint
2 days ago
- Business
- Mint
Unfazed by new players, GIC Re gears up to reclaim market share
Mumbai: Encouraged by promising results in the previous fiscal year, General Insurance Corporation of India (GIC) Re is looking to take the fight to its private-sector and foreign rivals. The country's largest and oldest reinsurance company grew its non-obligatory business for the first time in four years. The reinsurer posted a net profit of ₹6,701 crore for FY25, higher than ₹6,497 crore in the previous year. Earned premium for the year stood at ₹36,130 crore compared to ₹33,576 crore in FY24. Combined ratio, a profitability metric that indicates whether an insurer is making an underwriting profit or loss, improved to 108.8% for FY25 from 111.8% in FY24. Ramaswamy Narayanan, the company's managing director and chief executive officer, is aiming to bring this to below 100% over the next 6-7 years. Underwriting loss for the year reduced 16.4% to ₹3,352 crore. In an interview with Mint, Naranayan said the company is unfazed by the entry of new private players and falling market share, and the focus is now on profitability and improving the combined ratio. 'Today, I have the capital and the solvency. Going forward, GIC will write big-ticket shares in areas where there is profitability, growth and which gives us diversification. You will not see us writing the same classes again. We will look for opportunities elsewhere and that is where I see the strength of this company." Also read | Reform push: Insurance amendment bill heads to Parliament; changes to IBC, Companies Act will have to wait Narayanan attributed the fall in the company's market share in the domestic market from 60% to below 50% over the past 3-4 years to the increased size of the sector, entry of new players and more business being written by other existing players at a time when GIC itself was de-growing. Even so, GIC Re continues to write a big share in India, he said. 'The phase of de-growth and consolidation is done," Narayanan said, adding that growth going forward would be with profit. Reinsurance is insurance for insurance companies--insurers transfer their risk to another company to reduce the likelihood of large payouts for a claim. Reinsurers allow insurers to remain solvent by recovering all or part of a claim payout. Obligatory business Despite increasing calls for cessation of the obligatory business to GIC Re, Narayanan is confident that even if the obligatory business component is removed, GIC Re will only see a short to medium term impact. His confidence stems from the other-than-obligatory business that the reinsurer does today, called 'voluntary quota shifts'. This includes insurers which may feel that just giving 4% of business to GIC is less and may want the company to write more. 'So even if this 4% goes, I will get it back in voluntary quotations. I have no issues there," he said. Under the obligatory business arrangement, all insurance companies in India are required to get 4% of their reinsured portfolio covered by GIC. In exchange, GIC gives a certain commission back to the insurance companies. 'Will it hurt GIC if the entire 4% goes in a stroke? We will have issues explaining that obviously. Rating agencies will start worrying about what the business mix is going to be and how is it going to work? But I think over a period of time we will easily get it back," he said. Read this | How the crash impacts Air India, insurers and Boeing Narayanan emphasised that GIC's obligatory business has continued to grow despite the mandated percentage being reduced over the years from 20% to now 4%, purely because the overall market is growing. Currently, the obligatory business accounts for around 30% of the reinsurer's revenue, which is expected to fall considering the business consolidation undertaken by the company during 2020-2024. 'We really cut off a lot of loss-making businesses. So at that time, the obligatory business grew but other segments de-grew," he said, adding that this share in revenue could fall to about 25% by next year. The eventual plan is for the obligatory business to account for 25% of the business, international business for another 25% and balance 50% is the domestic business. Diversification Part of the growth strategy is also expanding the international business in order to diversify geographical risk for the reinsurer, especially for 'natcat' or natural calamities-related and political risk-related losses. This is done through sophisticated models to optimise capital management, Narayanan said, adding that while markets like the US may see more such incidents, the pricing is much better there compared with India, making it much easier to recoup losses. 'That is somewhere we have to improve because India is catching up in terms of the frequency and severity of incidents. And unfortunately, while climate change is a reality, a lot of these losses in India are due to how we manage our cities and how they are growing," he said. In October 2024, global rating agency AM Best upgraded GIC Re's credit rating to 'A-' from 'B++'. Beginning of calendar year 2025, the company started growing the international business. The reinsurer currently has overseas branches in Malaysia, South Africa and a subsidiary in the Lloyds marketplace in UK. Also read | LIC to decide on health insurer stake purchase in 2-3 months The second leg of diversification is being done through expansion into new product lines with the reinsurer now looking to write more health and motor insurance business—the two fastest growing segments within general insurance. 'We were pretty underweight on health. So we spoke to a lot of companies and we saw areas that could be of interest to us," Narayanan said. Competition Narayanan said he is not worried by the entry of private players into the market as he believes that GIC Re has always been a global player and its competitors multinational reinsurers and not domestic insurance companies. This includes Irdai awarding the reinsurance licence to Valuattics Reinsurance—marking the entry of the first private reinsurer to operate from within India. Narayanan believes the regulator could be open to awarding more such licences. "The point is, reinsurance is more capital hungry. So companies with deep pockets will need to come in. If they apply, I'm sure they will get it because Irdai wants more players to come into the market," he said, adding that it should not impact GIC's business because every company has their own way of getting business. While there is no shortage of business in India, a bigger issue is that India is perceived to be a very cheap market due to low pricing. 'Our competitors have always been, and even today, are multinational companies. I'm not competing with New India Assurance or Life Insurance Corporation. I'm really working with them and competing with Munich Re and Swiss Re and Hanoi," he said. In the face of this competition, what is expected to hold GIC in good stead is its long-standing partnerships that it has built over decades, he said. Also read | Third-party vehicle insurance: Insurers in distress over three-year rate pause 'GIC's relationships are more institutional. It's not about one person, but about the kind of support that we can give as an institution," Narayanan said, adding that as such, GIC does not work like a 'typical PSU" as it doesn't have too many offices or people and is a very lean organization. GIC Re currently has around 458 employees including recent recruitment of 80-85 people. HR overhaul Acknowledging the constraints that come with being a state-owned entity, Narayanan believes that GIC Re is trying to do things 'very differently". Hiring and human resource management is a key agenda for the organisation going ahead with Narayanan saying that while the reinsurer might not always be able to match its competitors' salaries, it is trying to offer value to employees in terms of work opportunities, differentiated training and learning across various lines of business as employees grow within the organisation. The objective is also to ready a second line of managers to take over the senior's role in case of exits or transfers. A lot of these HR-related changes are part of 'Project Parivartan'–introduced in 2022 and being spearheaded by KPMG, which GIC Re has hired as an external consultant to advise on the overhaul of its HR practices. The mandate for KPMG is to review existing HR practices and suggest global practices that can work within the PSU structure and factoring in the expertise required for this niche business. 'We have tried to see how we can restructure, also in terms of reducing hierarchy and red tape and creating clarity in what employees are doing and their role," he said. And read | Budget 2025: Insurers seek support for tax incentives, health cover, higher FDI limit
Hindustan Times
3 days ago
- Business
- Hindustan Times
Air India crash may see insurance claim of ₹4,080 crore, one of Indian aviation history's biggest: Report
The Air India plane crash in Ahmedabad on June 12, one of the worst in India's aviation history, is also headed towards one of India's costliest aviation insurance claims estimated to be around a staggering $475 million, which is around ₹4,080 crore, reported Bloomberg. 'This aviation insurance claim could be one of the biggest in India's history,' the report quoted Ramaswamy Narayanan, chairman and managing director at General Insurance Corporation of India, as saying. The insurance firm is among the ones that provided coverage for Air India. Also read: Gave her life to Air India: Mother of Saineeta, first crew member laid to rest after Ahmedabad crash Breaking down the huge sum of estimated insurance claims, Narayanan said that out of $475 million, around $125 million or ₹1,075 crore is estimated to be that for the aircraft hull and engine and the rest $350 million, or ₹3,014 crore, for the additional liability claims for loss of life for passengers and others, the report said. According to Narayanan, the hull claim will be settled first by the insurers and the liability claims will take some time to be settled. The total amount is over three times what the Indian aviation industry paid in total insurance premiums in 2023, according to GlobalData. Also read: Govt panel to study response to past air accidents, prepare SoPs The financial burden of the tragedy is set to hit the market of global aviation insurance and reinsurance. It could also make insurance costlier for Indian airlines. Following the crash, the insurance premiums in India's aviation sector are expected to go up soon or when the policies are renewed, said people familiar with the matter, the report said citing people familiar with the matter. For the Air India crash, the total insurance buyout could rise further since several of the victims were foreign nationals and in such cases, the compensation will be calculated according to the laws in their home countries, the people said on condition of anonymity. Also read: DNA profiling for Air India crash victims may end today, kin await results Bloomberg reached out to an Air India spokesperson for a comment, however, there has been no immediate reply. The impact of the big insurance settlement on India's insurance industry will be limited as the two companies involved earned only about 1% of their total premiums from aviation and had passed most of the risk on to global reinsurers, according to GlobalData. Indian insurers have offloaded over 95% of their aviation insurance direct written premium, or DWP, to global reinsurers, said the Bloomberg report. Because of that, 'the financial burden will predominantly fall on international reinsurers, leading to the hardening of the aviation reinsurance and insurance market,' according to Swarup Kumar Sahoor, senior insurance analyst at GlobalData. An Air India Boeing 787 Dreamliner crashed just 33 seconds after takeoff from Ahmedabad Airport on June 12 with 242 people onboard, out of which, 241 people died. Furthermore, around 30 people who were not on the plane died as it crashed at a residential area and also into the hostel building of a hospital. The tragedy sent shockwaves not across India but around the world as several victims were foreign nationals. Experts now trying to figure out what went wrong.
Time of India
3 days ago
- Business
- Time of India
Air India plane crash: Claims could reach $475 million, says GIC Re
Air India crash (Photo: AP) Total claims from the Air India crash in Ahmedabad could touch $475 million, driven by liability payouts that are expected to be over 2.5 times the aircraft value, said Ramaswamy Narayanan, chairman and managing director of GIC Re. In rupee terms, the claims could exceed Rs 4,000 crore. "The way we see it, the hull will be around $125 million and the liability claims on account of passenger liability, third-party liability and other PA and travel policies in vogue should work out to $350 million," said Narayanan. Although GIC Re is not a direct insurer, it has exposure to the Air India fleet through reinsurance. As the national reinsurer, it also bears part of the loss incurred by every domestic non-life company, which is mandated to cede a portion of the risks it underwrites.
Business Times
3 days ago
- Business
- Business Times
Air India crash seen triggering US$475 million in insurance claims
[MUMBAI] India's deadliest plane crash in more than a decade is set to send shock waves through the aviation insurance industry and trigger one of the country's costliest claims, estimated at around US$475 million. 'This aviation insurance claim could be one of the biggest in India's history,' said Ramaswamy Narayanan, chairman and managing director at General Insurance Corporation of India, one of the firms that has provided coverage for Air India. The claim for the aircraft hull and engine is estimated at around US$125 million, according to Narayanan. He estimates additional liability claims for loss of life for passengers and others will be around US$350 million. The sum is more than triple the annual premium for the aviation industry in India in 2023, according to GlobalData. The financial repercussions of the crash that killed 241 people on board and others as it fell in a densely populated part of Ahmedabad in western India on Thursday (Jun 12) will ripple through the global aviation insurance and reinsurance market. It's also likely to make insurance costlier for airlines in India. Insurance premiums across the aviation industry are expected to rise in India, either now or at the time of policy renewals, according to sources familiar with the matter. On the Air India insurance payout, totals could climb, since there were foreign nationals killed in the accident, and those claims will be calculated according to the rules in their respective jurisdictions, the sources said, who asked not to be identified discussing private matters. BT in your inbox Start and end each day with the latest news stories and analyses delivered straight to your inbox. Sign Up Sign Up A spokesperson for Air India did not immediately reply to request for comment. Insurers will first settle the hull claim followed by liability claims, according to Narayanan. 'It will take some time for liability claims to be settled,' he said. The impact on the domestic market will be partly mitigated by the fact that both companies only generated about 1 per cent of their total insurance premium from aviation, and ceded most of it to global reinsurers, according to GlobalData's insurance data. Broadly, domestic insurers have offloaded more than 95 per cent of their aviation insurance direct written premium, or DWP, to global reinsurers. Due to this, 'the financial burden will predominantly fall on international reinsurers, leading to the hardening of the aviation reinsurance and insurance market', said Swarup Kumar Sahoor, senior insurance analyst at GlobalData in a release on Monday. BLOOMBERG
Straits Times
3 days ago
- Business
- Straits Times
Air India crash seen triggering $608 million in insurance claims
India's deadliest plane crash in more than decade is set to trigger one of the country's costliest industry claims. PHOTO: EPA-EFE MUMBAI – India's deadliest plane crash in more than decade is set to send shock waves through the aviation insurance industry and trigger one of the country's costliest claims, estimated at around US$475 million (S$608 million). 'This aviation insurance claim could be one of the biggest in India's history,' said Ramaswamy Narayanan, chairman and managing director at General Insurance Corporation of India, one of the firms that has provided coverage for Air India. The claim for the aircraft hull and engine is estimated at around US$125 million, according to Mr Narayanan. He estimates additional liability claims for loss of life for passengers and others will be around US$350 million. The sum is more than triple the annual premium for the aviation industry in India in 2023, according to GlobalData. The financial repercussions of the crash that killed 241 people on board and others as it fell in a densely populated part of Ahmedabad in western India on June 12 will ripple through the global aviation insurance and reinsurance market. It's also likely to make insurance costlier for airlines in India. Insurance premiums across the aviation industry are expected to rise in India, either now or at the time of policy renewals, according to people familiar with the matter. On the Air India insurance payout, totals could climb, since there were foreign nationals killed in the accident, and those claims will be calculated according to the rules in their respective jurisdictions, the people said, who asked not to be identified discussing private matters. A spokesperson for Air India did not immediately reply to request for comment. Insurers will first settle the hull claim followed by liability claims, according to Mr Narayanan. 'It will take some time for liability claims to be settled,' he said. The impact on the domestic market will be partly mitigated by the fact that both companies only generated about 1 per cent of their total insurance premium from aviation, and ceded most of it to global reinsurers, according to GlobalData's insurance data. Broadly, domestic insurers have offloaded more than 95 per cent of their aviation insurance direct written premium, or DWP, to global reinsurers. Due to this, 'the financial burden will predominantly fall on international reinsurers, leading to the hardening of the aviation reinsurance and insurance market,' said Swarup Kumar Sahoor, senior insurance analyst at GlobalData in a release on June 16. BLOOMBERG Join ST's Telegram channel and get the latest breaking news delivered to you.
