General Insurance Corporation of India (GIC RE) Files Draft Paper For IPO:
General Insurance Corporation of India (GIC Re) on Monday filed a draft red herring prospectus (DRHP) for an initial public offering (IPO) with the Securities and Exchange Board of India (Sebi).
GIC has appointed investment banks Citigroup, Axis Capital, Deutsche Bank, HSBC and Kotak Mahindra Capital Co. Ltd to manage the public offering. The IPO is likely to raise over Rs 8000 – 10,000 crore. It is expected to hit the market in October-November.
The offer comprises a fresh issue of 1.72 crore shares and an offer for sale of 10.75 crore shares. Following the IPO, the government’s stake in the reinsurance firm will come down by 14.22%, according to the DRHP.
The offer is being made through the book building process and not more than 50% offer shall be allotted on a proportionate basis to Qualified Institutional Buyers (QIBs). Five of the QIB portion shall be available for mutual funds, and the remaining portion shall be available for allocation on a proportionate basis to all QIB Bidders, including mutual funds.
Further, not less than 15% of the offer shall be available for allocation on a proportionate basis to non-institutional bidders and not less than 35% of the offer shall be available for allocation to retail investors.
The company said it will not receive any proceeds from the offer for sale. The net proceeds of the fresh issue will be utilised towards augmenting the capital base of the company to support the growth of business, to maintain current solvency levels; and general corporate purposes.
GIC Re, posted a profit after tax of Rs 3,127 crore in FY17, an increase of 9.8% over the previous year, largely due to the crop insurance and growth in the investment income. The net worth of GIC Re stood at Rs 47,983 crore as against Rs 38,281 crore, which includes fair value change account registering a growth of 25.3%. In FY17, GIC Re’s total premium income grew 82.2% to Rs 33,585 crore from Rs 18,486 crore a year ago.
The premium split between the domestic and the overseas business during fiscal 2017 was 69% and 31%, respectively.
In FY17, GIC Re registered a lower combined ratio of 99.7% in the reporting year from 107.4% in the previous year. GIC Re had declared a dividend of Rs 1,002 crore for FY 17, which was a 17% increase over the previous year.
While their investment income for policy holder funds stood at Rs 3,053 crore in 2016-17 from Rs 2,803 in 2015-16, their investment income for shareholders funds stood at Rs 1,533 crore in last fiscal from Rs 1,3250 in 2015-16.
GIC Re received premiums of Rs 9,744 crore for crop segment in FY 17 and it leads agri treaties of 15 of 18 insurance companies. GIC Re now is the largest agriculture re-insurer globally.
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