State-run reinsurer General Insurance Corporation of India registered almost 20 per cent drop in net profit for the fourth quarter of 2018-19, on the back of provisions for its exposure to Infrastructure Leasing and Financial Services (IL&FS) and higher tax payout.

The reinsurer’s net profit fell 19.7 per cent in the quarter ended March 31, 2019, to ₹603.37 crore, against ₹751.60 crore a year ago.

GIC Re had a total exposure of ₹788 crore to debt-ridden IL&FS and its subsidiaries, and it made a provision of ₹358.91 crore in the fourth quarter of the fiscal. “This has been a very conservative and prudent stance of the management. We are confident of recovery at this point in time,” said Alice Vaidyan, Chairman and MD, GIC Re. It has exposure to IL&FS, ILFS Financial Services and ITNL, and has made 50 per cent provisioning for its secured holding and 100 per cent for unsecured holding.

Taxation

Meanwhile, GIC Re also had to make a provision of ₹590.71 crore p for taxation in the fourth quarter of the fiscal.

Its gross premium for the January to March 2019 quarter declined 5.11 per cent to ₹8,089.35 crore, compared to ₹8,525.02 crore.

It, however, made an underwriting profit of ₹101.16 crore in the reporting quarter, against an underwriting loss of ₹1,169.98 crore a year ago. Total assets increased by 8.40 per cent to ₹1.18-lakh crore as on March 31, 2019, from ₹1.09-lakh crore in the previous fiscal.

GIC Re’s net profit for 2018-19 also fell by 31.2 per cent to ₹2,224.31 crore, compared to ₹3,233.58 crore in 2017-18.

Commenting on the revision in premium rates, GIC Re said it was aimed at correcting the imbalance between the premium rating and claims history over a number of years. There is no plan to increase rates for other occupanices at present. “Let the market settle,” said Vaidyan. The reinsurer, in March 2019, revised premium rates for eight sectors under the property class, including thermal power plants, textiles, pharma and steel, in line with the claims history of these sectors across the domestic market.

The company’s scrip remained largely flat and closed at ₹226.40 apiece on the BSE on Thursday.

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