State-owned General Insurance Corporation (GIC Re), seventh largest non-life reinsurer globally, has decided to put its Dubai branch into run off mode as the Dubai authority has not renewed the licence issued to the company. The reinsurer will now run the Dubai business from the GIFT City IFSC in Ahmedabad.
“During the quarter ended June 21, GIC Re decided to place its Dubai branch into run off because of non-renewal of license by Dubai authority, non-compliance in solvency requirement etc,” GIC Re said in a stock exchange filing. The decision to place the Dubai Branch into run off, has been informed to insurance regulator IRDAI vide letter dated July 6, 2021, it said.
“GIC Re has decided to continue the activity/ operations relating to Dubai branch from GIFT City, India,” it said. The board of GIC Re also accorded its approval and to carry out suitable statutory requirements if any on July 7, 2021 by a circular resolution. UAE’s Insurance Authority merged with the Central Bank of the UAE earlier this year.
“Effective July 3, 2021, the Dubai branch of GIC Re will no longer underwrite business under its operations. However, the branch will continue to service the underwriting and claims run off from the business underwritten prior to July 3,” GIC Re said in a letter to its business partners.
During the financial year 2019-20, the gross premium written by the Dubai branch is AED 521.94 million (Rs 1,054 crore) compared to AED 956.47 million (Rs 1,932 crore) last year and earned a profit of AED 248.61 million (Rs 502 crore) as against a loss of AED 25.91 million (Rs 52.3 crore) last year. GIC opened its representative office in Dubai in 2005 and converted it into a branch in 2007.
GIC Re has 3 overseas offices — branch offices in London, Dubai and Malaysia. Apart from this, the corporation has three wholly owned subsidiaries — GIC Re South Africa Ltd, Johannesburg, GIC Re, India, Corporate Member Limited, London and GIC Perestrakhovanie LLC, Moscow. It has also invested in the share capitals of Kenindia Assurance Company, Kenya, India International Insurance Pte Ltd, Singapore, Asian Reinsurance Corporation, Bangkok, East Africa Reinsurance Company Ltd, Kenya, and GIC Bhutan Re Ltd, Bhutan.
In April 2018, syndicate fully capitalised by GIC Re became operational at Lloyd’s of London. This syndicate is expected to scale up over the next few years towards achieving the medium-term objective of management of achieving 60:40 – domestic to international — risk portfolio composition, according to GIC Re Annual Report.
During the financial year 2019-20, the gross premium written by the London branch was GBP 136.33 million compared to GBP 99.29 million last year and earned a profit of GBP 5.19 million as against a profit of GBP 11.04 million last year. The gross premium written by the Malaysia branch was RM 856.16 million compared to RM 732.64 million and incurred a loss of RM 53.58 million as against a loss of RM 34.40 million.
GIC Re holds 20 per cent shares in India International Insurance Pte. Ltd, Singapore, which has a share capital of S$ 50 million. The total shareholding of GIC Re in the company is 10 mn shares each of S$1. The company has made a profit of S$ 9.94 million as against a profit of S$ 4.76 million last year. In Asian Reinsurance Corporation, GIC is holding 6.32 per cent of the share capital as associate member of Asian Re in addition to holding 0.99 per cent of the share capital as its regular member on behalf of the government of India.
The maiden reinsurance company of Bhutan is a joint venture between GIC Re and local Bhutanese promoters. It has a 26 per cent stake in the joint venture and held 13,000,000 shares of value Nu 10 each as of December 2019. The rest of the shareholding is divided between two Local Bhutanese promoters with 17 per cent stake each and 40 per cent shares are held by the public.