Hitesh Joshi, who recently took over as chairman and managing director of state-owned reinsurer GIC Re, outlined the company's strategic focus on improving its financial strength rating from A- to A. According to reports from Business Standard, achieving an 'A' rating would position the company in a stronger and more stable financial position. The company currently maintains a solvency ratio of over 400 per cent (four plus), providing ample room for material growth and diversification initiatives.
As reported by Business Standard, GIC Re plans to rebalance its portfolio away from climate-sensitive risks, with property, motor, health and agriculture currently accounting for about 80 per cent of premium. The company aims to achieve better balance between property and casualty businesses, as the property segment faces significantly higher exposure to climate-related risks. Additionally, GIC Re intends to diversify between commoditised lines and specialty classes including marine, engineering, liability, directors' and officers' liability, errors and omissions, and cyber insurance to reduce dependence on climate-sensitive risks.
According to Business Standard, GIC Re currently has international markets accounting for nearly 25 per cent of business, with the company targeting a 60:40 domestic to international ratio from the existing 75:25 mix. The company previously achieved a 55 domestic and 45 international split in 2016, though this represents a challenge given the domestic market's continued strong growth compared to international markets. GIC Re also plans to increase its presence in the life reinsurance segment as part of its diversification strategy.
As reported by Business Standard, the global reinsurance market has softened due to increased global capacity and greater competition, with India experiencing even greater pricing pressure than global markets. About 20 foreign reinsurers are competing for Indian businesses, making the domestic market softer than other markets. The company follows a long-term underwriting approach, managing profitability across market cycles rather than reacting to short-term pricing changes, aiming to maintain long-term client relationships while adjusting capacity deployment based on market conditions.
According to Business Standard, GIC Re sees significant opportunities in emerging risks including the green economy, solar plants, transition economy, and environmental, social and government-related cover. The company also identifies cyber, surety and parametric risk transfer solutions as key growth areas. However, these forms of coverage need to create meaningful bases to make a significant difference in the reinsurance market.
