General Insurance Corp. of India is the largest reinsurance company in India in terms of gross premiums accepted in Fiscal 2017, and they accounted for approximately 60% of the premiums ceded by Indian insurers to re-insurers during Fiscal 2017, they are also an international re-insurer that underwrote business from 161 countries as at June 30, 2017. GIC maintain a diversified investment portfolio to generate investment returns to support their liabilities for the reinsurance they underwrite and to create shareholder value. They have an Indian investment portfolio, which includes fixed income debt securities including Government securities, equity securities including exchange traded funds, and other investments, but does not include fixed term deposits for their business written outside of India at their branches.

 

 

Strengths:

  • Leader in Indian reinsurance industry with a trusted brand and 44 years of experience.
  • Significant global player with growing international presence.
  • Diversified product portfolio and revenue streams.
  • Robust and comprehensive risk management framework.
  • Diversified investment portfolio generating strong growth and attractive yields.

 

Key Highlights:

  • The company has generated total revenue of Rs 3644.18 crore for March 2017 vs 3234.07 crore in March 2016, shows growth of almost 13%.
  • The company has reported profit after tax of Rs 2857.85 Cr and 2654.91 Cr for the year 2017 and 2016 respectively.

Risk Factors:

  • There are outstanding litigations against their Corporation, their Directors and their Group Companies and any adverse outcome in any of these litigations may have an adverse impact on their business, results of operations and financial condition.
  • Their success depends upon their ability to accurately assess the risks associated with the businesses that they reinsure, and if actual losses exceed their estimated loss reserves, their net income and capital position will be reduced.
  • Their risk management system, as well as the risk management tools available to them, may not be adequate or effective in identifying or mitigating risks to which they are exposed.

 

Outlook:

GIC is the largest reinsurance company in India, they provide reinsurance across many key business lines including fire (property), marine, motor, engineering, agriculture, aviation/space, health, liability, credit and financial and life insurance.

Their gross premiums on a restated consolidated basis from their international business in Fiscal 2017, Fiscal 2016 and Fiscal 2015 were ₹10300.45 cr, ₹8339.69 cr and ₹6609.45 cr, respectively, and their gross premiums have grown at a CAGR of 24.84% from Fiscal 2015 to Fiscal 2017. Their gross premiums on a restated consolidated basis in Fiscal 2017, Fiscal 2016 and Fiscal 2015 were ₹33740.79 cr, ₹18534.24 cr and ₹15270.15 cr, respectively, and have grown at a CAGR of 48.65% from Fiscal 2015 to Fiscal 2017.

In the same Fiscal Years, their PAT on consolidated basis was ₹3140.62 cr, ₹2823.41 crand ₹2890.97 cr, respectively, and have grown at a CAGR of 4.23%from Fiscal 2015 to 2017. For the three months ended June 30, 2017, their gross premiums and their PAT each on consolidated basis ₹17325.35 cr and ₹628.67 cr, respectively.

As at June 30, 2017 and March 31, 2017, their Indian investment assets on a standalone basis had a carrying value of ₹41929.85 cr and ₹39126.27 cr, respectively and a fair value of ₹73902.56 cr and ₹69162.58 cr, respectively.

On the performance front, the company is available at PE of 30 times on post-equity issue. P/BV as on June 2017 works out to be 3.89. There are no listed reinsurance companies in India hence GIC will be the first to get benefited from listing. Hence, considering the above factors long term investment in the company can be recommended.


DISCLOSURE IN PURSUANCE OF SECTION 19 OF SEBI (RA) REGULATION 2014

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