PART-II

The entire general insurance business in India was nationalized by General Insurance Business (Nationalization) Act, 1972 (GIBNA). The Government of India (GOI), through Nationalisation took over the shares of 55 Indian insurance companies and the undertakings of 52 insurers carrying on general insurance business.

General Insurance Corporation of India (GIC) was formed in pursuance of Section 9(1) of GIBNA. It was incorporated on 22 November 1972 under the Companies Act, 1956 as a private company limited by shares. GIC was formed for the purpose of superintending, controlling and carrying on the business of general insurance.

As soon as GIC was formed, GOI transferred all the shares it held of the general insurance companies to GIC. Simultaneously, the nationalized undertakings were transferred to Indian insurance companies. After a process of mergers among Indian insurance companies, four companies were left as fully owned subsidiary companies of GIC (1) National Insurance Company Limited, (2) The New India Assurance Company Limited, (3) The Oriental Insurance Company Limited, and (4) United India Insurance Company Limited

The next landmark happened on 19th April 2000, when the Insurance Regulatory and Development Authority Act, 1999 (IRDAA) came into force. This act also introduced amendment to GIBNA and the Insurance Act, 1938. An amendment to GIBNA removed the exclusive privilege of GIC and its subsidiaries carrying on general insurance in India.

In November 2000, GIC is refortified as the Indian Reinsurer and through administrative

instruction, its supervisory role over subsidiaries was ended.

With the General Insurance Business (Nationalization) Amendment Act 2002 (40 of 2002) coming into force from March 21, 2003 GIC ceased to be a holding company of its subsidiaries. Their ownership were vested with Government of India

GIC REs BUSINESS PERFORMANCE

During the year 2010-11 the Corporation registered a growth of 20% over the previous year. The premium growth in the domestic market was 21.68%. The gross premium income of the Corporation was ` 11,681 crores and the income during the year, from investments was 2339 crores. Underwriting results showed an overall loss of ` 1104 crores in 2010-11 compared to the underwriting losses of 780.19 crores in the previous year. The ratio of total business expenses to the earned premium i.e., combined ratio stood at 111.6%. The solvency margin of the Corporation as on 31st March 2011 was 3.35.

During 2009-10 the Corporation notched up a remarkable improvement in the foreign business with a growth rate of 39%. The premium growth in the domestic market was at 9.4%. The Corporations gross premium income during the year 2009-10 is ` 9736.92 crores and the income, during the year from investments was registered at ` 2040.25 crores. Underwriting results show an overall loss of ` 780.19 crores in 2009-10 compared to an underwriting loss of ` 213.36 crores in the previous year. The ratio of total business expenses to the earned Premium i.e. Combined Ratio stood at 109.64%. The Solvency margin of the Corporation as on 31st March 2010 was 3.71

CLASSWISE PERFORMANCE FIRE:

Fire business recorded a modest growth of 7.7%. The earned premium for the year was ` 2737 crores as compared to ` 2361 crores in the previous year. GIC Res domestic premium grew by 19% (` 753 crores from ` 634 crores) in keeping with the growth of the Indian Fire Insurance Market GIC Res foreign inward business grew by 14% (` 1985 crores from ` 1739 crores. Fire business recorded a growth of 23%.The earned premium for the year was ` 2361 crores as compared to ` 1913 crores the previous year.

The domestic premium dropped by 4% (` 634 crores from ` 661 crores).The primary reason for de-growth of domestic premium is due to rates continuing to be thin following detariffication. GIC Re's foreign inward business grew by 38% (` 1728 crores from ` 1252 crores)
MARINE CARGO MARINE HULL

As per the provisional figures published by IRDA for the Indian domestic market the cargo gross premiums for 2010/11 have gone up by about 22% over the previous year. Domestic business accounts for 65% of GIC Re's cargo portfolio, hence GIC Re's cargo portfolio reflects the similar growth in premium as seen in the domestic market. Cargo Gross Premium for 2010-11 is ` 421 crores as compared to 345 crores in the previous year. Earned premium figures are shown in the bar graph aside next to Marine Hull Incurred claims stood at ` 327.81 Crs (` 178 Crs. For previous year). No significant losses have been reported during the year. The outlook for 2011-12 appears positive. Whilst the Cargo Gross Premiums for 2009-10 have increased by about 5% over 2008-09, the Net Earned premiums for 2009-10 have gone down marginally to 302.16 Crores from ` 314.22 Crores in 2008-09. This decline is in account of adjustment made in reserve for unexpired risks. No major losses have been reported during the year. The overall loss ratio has come down from 75% (2008-09) to 60% (2009-10). The outlook for 2010-11 appears positive