State-owned reinsurer General Insurance Corporation of India (GIC Re) said today it reported a marginal 4 per cent fall in net profit at Rs 2,253 crore for FY14 after some business was lost due to IRDA's move to bring down obligatory premium to 5 per cent from 10 percent earlier.
Obligatory premium is the compulsory cess paid by general insurers to GIC Re every year, which was halved by the regulator Insurance Regulatory and Development Authority (IRDA) last fiscal.
The sole domestic reinsurer earns as much as 43 per cent of its revenue from obligatory premium and this has resulted in its underwriting losses by more than double during the year to Rs 887 crore, from Rs 371 crore during the previous fiscal.
"We lost the business to the tune of Rs 3,500 crore during FY14 due to IRDA's decision to bring down the obligatory premium to 5 per cent, as against the earlier existing mark of 10 per cent effective April 1, 2013," GIC Chairman and Managing Director Ashok Kumar Roy said.
The gross premium of the firm also slipped 2.69 per cent during the year to Rs 14,680 crore from Rs 15,086 crore, he said.
However, the networth of the company went up by 18.69 per cent during the year to Rs 10,969 crore as against Rs 9,241 crore during the previous year.
The solvency margin of the company also improved to 2.73 per cent during the period from 2.39 percent a year ago.
The company's investment income also went up to Rs 3,482 crore compared to Rs 2,895 crore during the previous year.
"We had garnered around Rs 1,000 crore profit in equity market during the year and also there was improvement in fixed income investment like government bonds and fixed deposits, he said.
"We are looking at a business growth by 6-10 per cent during the current fiscal," Roy said.
The company is trying to make its foray in the US, which is responsible for the 35 per cent of the world's total reinsurance business.
