GIC(General insurance corporation of India):
A senior official informed FE that the government is considering selling a stake of up to 10% in the state-run General Insurance Corporation (GIC Re) during the current financial year. The official noted that GIC Re received positive feedback during recent roadshows aimed at informing potential investors about the company’s distinctive position in the Indian reinsurance market and its significant growth prospects.
Regarding the Life Insurance Corporation (LIC), the official clarified that while there are no immediate plans to divest further stakes, the government may explore such options in the future, albeit in smaller increments and at opportune moments.
GIC stands out as the sole Indian reinsurer offering vital support to direct insurers within the country, and it secures obligatory cessions from domestic general insurers for every policy.
During the roadshows, GIC emphasized its commanding presence in the domestic market, holding a 67% share in gross reinsurance premium amounting to $4.4 billion in FY23. The remaining shares are held by foreign reinsurance branches (FRBs).
Projections suggest that India’s general insurance market will grow at a compound annual growth rate (CAGR) of 9.9% from 2021 to 2026. Reinsurance premiums in India are anticipated to reach $12 billion by 2025, as outlined in investor presentations.
With robust financials, ample capacity, and expertise, GIC Re is poised to maintain its leadership position in the market. In FY23, GIC achieved a solid return on equity (RoE) of 20.1%, while its net profit surged 2.9 times year-on-year to $830 million.
Following the IPO and subsequent market response, the government plans to initiate the sale of at least another 1.5% stake in LIC, aiming to render the stock eligible for inclusion in index funds and attract a broader base of long-term investors.
