General Insurance Corporation of India (GICRE) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to General Insurance Corporation of India Q4, FY'21 Earnings conference call. [Operator Instructions] Please note that this conference is being recorded. I would now like to hand the conference to Mr. Binay Sarda from Christensen Advisory. Thank you, and over to you, sir.

Thanks, Jenny. Good evening to all the participants on the call, and thanks for joining this Q4, FY 2021 Earnings Call for General Insurance Corporation of India. Please note that we have mailed out the press release to everyone, and you can also see the results on our website as well it has been uploaded on the stock exchange. In case if you have not received the same, you can write to us, and we'll be happy to send it over to you. Before we proceed with the call, let me remind you that the discussion may contain forward-looking statements that may involve known or unknown risks, uncertainties and other factors. It must be viewed in conjunction with our businesses that caused future results, performance or achievement to differ significantly from what is expressed or implied by such forward-looking statements. To take us through the results of this quarter and answer our questions we have with us, the management of GIC represented by Mr. Devesh Srivastava, Chairman and Managing Director; and other top members of the management. We'll be starting the call with a brief overview of the quarter gone past, which will then be followed with the Q&A session. With that said, I'll now hand over the call to Mr. Devesh Srivastava. Over to you, sir.

Thank you. Thank you, Binay. Good afternoon, everyone. I'm pleased to announce the financial performance for the quarter and full year ended March 31, 2021. Before I take you though through the key operating financial highlights for the year, I hope that all of you are safe and have been taking adequate precautions to protect yourself and your family from the second wave of the COVID-19 pandemic. Though our gross premium was impacted due to the pandemic, our performance at the underwriting level improved significantly due to our relentless focus in putting necessary measures in place to bring down the incurred claims ratio. It is heartening to note that the combined ratio is showing a positive trend despite the challenging environment. Let me now take you through some of the key highlights of the financial performance. The gross premium income of the company was INR 47,014 crores for financial year '21 as compared to INR 51,030 crores for financial year '20. The investment income increased by 24% to INR 8,820 crores in FY'21 as compared to INR 7,125 crores in the previous year. Incurred claims ratio declined to 92.4% in FY'21 as compared to 97.5% in FY'20. Combined ratio in FY'21 improved to 112.03% versus 114.38% for FY'20. The adjusted combined ratio by taking into consideration the policyholders' investment income, works out to 95.85% for FY'21 as compared to 102.47% in FY'20. The company recorded profit before tax of INR 3,163 crores in FY'21 as against a loss before tax of INR 445 crores in FY'20 and profit after tax of INR 1,920 crores in FY'21 against net loss of INR 359 crores in FY'20 on account of better performance at the underwriting level and increase in investment income. Solvency ratio improved to 1.74 as on March 31, 2021, compared to 1.53 as on 31 December 2020. Net worth of the company, without fair value change around, increased to INR 22,452 crores as on 31 June of 2021 as against INR 20,529 crores as on 31, 03, 2020. Net worth of the company, including fair value change account, increased to INR 49,643 crores on 31 March, '21, as compared to INR 35,425 crores as on March 31, 2020. On the premium breakup, domestic premium for FY'21 is INR 30,009 crores, and the international is INR 17,004 crores. The percentage split is domestic 63.8% and international, 36.2%. So there is a de-growth in the domestic premium by around 17.2%, while the international book has grown by 14.9%. We will continue to work towards bringing down the combined ratio and improve our performance at the underwriting level. We are confident of improved performance going forward and remain optimistic on future prospects. Having given the highlights, we will now open the floor for questions from the interested parties. Thank you.

[Operator Instructions] The first question is from the line of [indiscernible] from [ IDBI ] Capital.

My question is regarding your portfolio of health and life. So what we observed during the quarter is that the claims and subsequently, the underwriting [ seen between ] in these 2 segments are -- the losses are quite high. So given the second wave impact, if you can just give some bit of color in terms of how do you see these segments shaping up? Secondly, we've done really well in the aviation segment, and we've reported underwriting profits also in the motor segment. So I would believe that this would also be a factor on the fact that there have been a lockdowns and less traffic on the road. So how sustainable do you think these -- the underwriting segment is going to be -- the underwriting profit in the segment is going to be going forward? And thirdly, if you can just give some amount of color in terms of the -- how we are looking at our underwriting from a risk selection point of view? Because we've really done well so far this quarter. So what has led to this improvement in terms of this selection that's led to a lower claims issue? So that's it from my side.

All right. For health and life, Suchita, ma'am, may I ask you to come in, please? No, I'm asking my colleague, Ms. Suchita Gupta, who is heading the health and life vertical to come in. To answer your question about health and life. Obviously, under the COVID regime, so to say, you know that both health and life have been a challenging sector. Now health, as such, is more of a retail product, doesn't require much of reinsurance. So our book of health is largely based on the obligatory sessions that we get from the domestic market. In that health -- so we have seen some trends coming in because of COVID. But in the same [indiscernible] I would hasten to add that due to the fact that many of the planned hospitalizations that would have normally taken place had COVID not being there were pushed. So it was an offsetting factor. But the more important bit for us is that thanks to the fear of COVID in everyone's mind, lots of people started looking at health insurance as a purchase. It broadens the base, also the fact that more of retail health picked up, which is a very heartening factor for us. And that helped us -- I mean, the growth in health was flat, so to say, despite the fact that people are not renewing very vigorously, but a flat growth for us in the reinsurance space, coupled with the fact that we have, because of COVID, done some very prudent reserving as well. That reserving is something that any reinsurer would be doing because that is what is sanity. And you know that COVID is still not over, so you provide for the worst, and that is why our health portfolio is where it stands today. On the life sector, again, though -- I mean if you see it in its entirety, life is just about 2.5% of our entire portfolio, but it has registered a good growth, [ 30% ], obviously, because the base is small. So that is a sector that we are looking to grow, especially because it acts as a very good balancing force for our non-life book. We are growing that as well. The prices are challenging because there are the players, the FRBs and GIC are all there in this space, looking at a very small slice of the life reinsurance market, but we are still a dominant player in this sector. You also spoke about aviation and motor. Yes, aviation has been having a lot of downside in the earlier years, but thanks to the shrinking of capacity globally, aviation sector has seen an upswing in the premium rates, which has helped us a great deal. Also that in COVID, when there were not too many planes flying and there was not much of an air traffic. That has also helped us for our claim ratio stabilizing, but the major factor still was the fact that the premiums have seen a huge upswing in the aviation sector. Motor, similarly, is again something that doesn't require much of reinsurance. And much like health, a large part of our book is the obligatory sessions that we get from the market. But again, thanks to COVID, there were not so many motor cars flying. Also the fact that the automotive sector is in itself had a bit of a stretch, especially more so in the initial COVID period. So there was -- though a downstream in the premiums, but the premiums also didn't see much of a movement there. So the aviation and the motor sector have both done well for us. Coming to the last bit where you mentioned about underwriting and risk selection. Well, that is the basic tenet of reinsurance that you should be extremely prudent in testing others, exactly what we are doing now, and that is what is being reflected in our figures. The basic cost for long-term sustainability is still your first [indiscernible] having very good risk selection, coupled with all the underwriting discipline that you can muster and get on to your book because that is your sustainable model. Your investment income and adjust only add to whatever you make from your operating profit. And that is the journey that we have undertaken for ourselves. And our figures redeem our fate in the strategies that we have set for us has been the right one.

The next question is from the line of [indiscernible] from [indiscernible] Investment.

So pardon me for my ignorance about your business, but I just want to know how the profits are distributed between policyholders and shareholders? Because I see two type of resource in your results presentation. So is there any formula for dividing the profit to the respective shareholder growth and the policyholders. Can you elaborate, please?

Yes. Surely, surely. We have Ms. Jayashree Ranade. Ma'am, can I request you to come in here, please?

Jayashree Ranade, you may please go ahead, ma'am. Sir, just allow me a minute, I'll just reconnect, ma'am, as we can't hear her. Ma'am, you're reconnected, you may please go ahead.

Yes. Hello? Yes. So policyholders funds and shareholders funds are defined, as policyholders funds constitute our unexpired risk reserve outstanding loss business and premium deficiency [indiscernible]. So that's the totals. Since the shareholders reserve their funds [indiscernible] called your [indiscernible]. So now we have total reserves split into 2. Now all our investment income, all our [indiscernible]. So investment income is divided into this, which are for policyholders funds and other than which I told you shareholders funds [indiscernible], so total fund are bifurcated into these [ 2 things ]. So policyholders funds basically constitute the results of the insurance policy related or the insurance policy [indiscernible]. Now various bifurcations are done based on the policyholders [ funds ] with shareholders. So I think -- Am I little bit -- should I elaborate further? Or is it okay?

What I want to understand is out of the net profit, is there any formula, based on which the certain percentage would go automatically to shareholders funds and certain funds percentage would go to policyholders fund?

Sir, our net profit is constituting part of our, what you call -- there is a profit and loss account. And also, there are other accounts, [indiscernible] right, sir? So all over -- we shouldn't [indiscernible] in the components as part of [indiscernible]. Now this account [ that we have seen ] [indiscernible] commission plans are recorded and the [indiscernible] is into the revenue account. Thereof, investment income is to [indiscernible] into policyholders, that is the revenue income and shareholders that is your profit and loss account [indiscernible] into the proportion of policyholders context shareholders. So this is only investment income and the expenses [indiscernible] all insurance related are gathered into the revenue account. The balance is transferred into profit and loss account and finally the [indiscernible]. So to say, yes, you're right in a way, that investment income of the corporation is divided into policyholders funds and shareholders funds and finally, [indiscernible] net profit, which we have on both 3000 odd figure. And finally, net profit before the tax is [indiscernible]. Which all belong to shareholders.

Okay, ma'am. Still, I'm not -- one, can I take this offline with you?

Sure. Certainly, certainly.

[Operator Instructions] The next question is from the line of Sanketh Godha from Spark Capital.

I have two [ data ] keeping questions with respect to the financials. One is why our tax rate has been very high in the current fiscal and even for the quarter. Just wanted to understand the -- why it so? And what we can expect it going ahead? So that's the first question. And second question which I've had was with respect to data keeping was we have a write-back of INR 424 crores in the quarter -- in the fourth quarter. So I just wanted to understand what is it with respect -- it is with respect to reinsurance or something with respect to investments which has come back to us and therefore, we have written back the provisions.

Jayashree Ranade, can you take that also, please?

Yes, please. Sir, provision for taxation, the tax rate for this year is calculated based on the income tax loss applicable to us. In the earlier years, we used to have an exemption called profit on sale of long-term investments, that is under section [ 10-34 ] we choose to get exempt. Now since last year, '19, '20 onwards, the tax rate -- since last year, there was a loss, so there was not much of an issue in that. And as that tax calculation are different. So in the current year where there's a profit, now an entire applicable rate of 30%-plus will be applicable to us because Section 44 says that taxable income to be considered as noted in the profit and loss account that is why we increased the tax rate. About the...

But sir -- ma'am, thank you but just to continue on this. We have some mad benefits and all those things. So ultimately, our tax rates should have been lower than 30 odd, and it is almost 39% for the full year and 38% for the quarter. So still it remains very high compared to usual standards, even if you have not moved to 25% new tax rate revenue?

You're right. But the basic reason for increase is that exemption, which has cost [indiscernible] for it. Now all the other things I'll tell you. Certain provisions which will hit like [indiscernible] are added back into [indiscernible] cannot get those exemptions. So that has to be [indiscernible] that. So if you add that, that actual taxable profit becomes quite high. And that's why 39% it is.

Yes. Got it. Got it. Got it, ma'am. And can you explain that a write-back of INR 424 crores?

Yes. This is an exercise which is carried out this year to reconcile the balances pending into our books. [indiscernible] insurance balances are consistently and continuously flowing to and fro from saving company to reinsurers from reinsurer to us, like in word and [indiscernible] and things like that. So there was a reconciliation exercise, which was carried out. [ And ] based on various advances and various -- we could finalize the reconciliations up to our particular, let's say, is up to 31 March '18, so we could get the confirmation from the [indiscernible]. And in the process, they will provide[indiscernible].

Okay. But [indiscernible] very high. Ma'am, anything we have provided with respect to the unprovided book, [ which ] those small numbers, and did we provide anything with respect to reliance and all those things? Or I mean you did not do any incremental [indiscernible]

I request Tripathy to come in there, please?

Sure, sir. Sure. Sanketh, good evening. As you would have seen from our books, we have completely provided for the Reliance Capital and Reliance Home finance as on March 31, 2021. So all fully provided all the stress assets have been fully provided by us. As on March 31, we don't have any further such provision to be made.

Got it, sir. Sir, sir, can you break down your investment income into interest income, dividend income and capital gains for full year and for the quarter, sir, if possible?

I request Jayashree madam to look into this.

Yes. Sanketh, I can give you full year income break down as you require. Yes. And equity dividend is approximately INR 748.5 crores. Then our profit on sale of investments is approximately INR 4,166 crores. Okay. And overall is INR 8,444 crores, Indian, Indian, domestic, okay. Of which the balance total [indiscernible] all interest income. And in fact, the rest is also in interest income for the intern foreign business.

Yes. Okay. Got it. Sir, you said total -- okay. Fine. Okay. Ma'am, sir, I have a couple of questions with respect to business. One is that we have been hearing that a few states are not comfortable with the crops being now, especially we have heard about Maharashtra. So there is a possibility that crop size will further shrink in FY'22 because [indiscernible] states might not use PMFBY as a way of ensuring their farmers in that respective state. So just wanted to understand the size, how you see this crop business to play out? And second thing with crop, any tweaking, which has further happened compared to we have tightened it a lot last year, any further tightening or relaxation has been offered to the primary company with respect to crop insurance?

Sanketh, again I'll request Tripathy to come in.

Sure, sir. Sanketh. As far as PMFBY is concerned, we don't see any shrinkage in premium this year. Excepting MP, West Bengal, almost all other states have indicated that they will be at least following PMFBY this year. And MP and Bengal also have [indiscernible] their crop insurance, [indiscernible] but in a different structure of the PMFBY. It is not strictly PMFBY. So we are not seeing on a country-wide basis, we will not see reduction in overall [ crop ] insurance premium. Now it is our choice, whether we want to write all the [ crop insurance ] or we want to write only PMFBY. Okay? Now since PMFBY remains a cabinet approved scheme, we continue to support that. We have not looked into other subsets of PMFBY, which are being looked into by other space. Okay. Now regarding tweaking, we haven't done any further tweaking to what we had done last year because the steam is on for 3 years. And we had -- in our tweaking terms, we had made it clear to all companies that based on the performance of this past year, we will look into the terms and condition in the subsequent year. So as [ luck would have it, ] this year has been very good. And most of the companies have almost reported a loss ratio around much below 80%. So there is no immediate cause for concern or for any tweaking of the existing terms and conditions.

Got it, sir. Perfect. Sir, another couple of questions on the business. Is that on -- we lost out around INR 700 crores of business for last year in Jan renewals because of a rating downgrade. So in June renewals, have we experienced in [ international ] market the same phenomena? And then second thing, which I wanted to check was, sir, as in, in renewal business, in deal renewals, what kind of price hardening you have witnessed with respect to [indiscernible] business?

Hitesh, can I request you, please?

Mr. Hitesh Joshi, your line is unmuted, please unmute yourself. Mr. Hitesh Joshi, your line is unmuted, please unmute it from your end.

So Sanketh, the thing is there -- essentially, individual property renewal season is heavily concentrated for January and we have talked about this January, we were doing the last call because by that time, our renewal season was over. Just to revisit that change, whatever undergoing the [indiscernible] renewal in all these geographies and within the geographies, different kinds of accounts, given the customer growth history and changes in exposure will give it different behavior. A very broad-based picture of the essentially investing markets [indiscernible], we can say that [indiscernible] account, which has not had a significant decrease on time there, it would have something less [indiscernible] and it is probably under the program, which can have a rate hardening of something like 20% to 25%. Apart from this, there was a significant hardening in Japan. And Europe also saw hardening, another global hardening, across COB, across classes of business, across segments. And this earning vary depending on the time, profile, the geography, [indiscernible] and the underwriters' perception. Does it help, Sanketh?

Okay. But in June also, we get a lot of renewals from [indiscernible] on that course. So there also, if you have participated, we have seen further hardening, sir?

Yes. The hardening continues, essentially, the hardening continues. And it is expected to continue for next or at least 4 to 6 quarters.

Okay. Okay. Okay. Because I see that in the current quarter, that is in the fourth quarter, the entire improvement in the combined ratio to 103 what was driven by the overseas business. So sir, just wondering that is largely because of the rate hardening and probably there's no cat events, big time cat events happening in the [indiscernible]?

I would not say that this rate hardening will get so immediately with respect to our finances because whatever we have written on January, the first installment will get booked to say, between, say, March and May, right? So it's just in May, and when [indiscernible] into 4 installments. So it could be [ resource ] development. And they're also now forgetting the losses, which we provided on the [indiscernible]. It will be a mixture of everything. But whatever is the hardening, the response of that is reflected in our finances.

The next question is from the line of Vinod Rajamani from HSBC.

Just had a few questions. Number one, for the current financial year, what is your expectation of the split between the international and the domestic business? Just in terms of what expectations you have. That is one. The second question is, in terms of this push towards getting the combined ratio to 100%, which remains our goal for the company, where is that delta going to come from? Is it going to come -- because on the fire side, more or less, it is supposed to be done, then could it come from the international business? Could it come from health? Just some color on which lines of business could drive this improvement to a 100% kind of combined ratio. These are the two questions I had.

Okay. See, the domestic/foreign split, currently, is 64-36, which is fairly close to where -- I mean, last year, we were at 71-29, so there has been a certain movement. It depends. You see since we took a lot of insight into what the agriculture portfolio domestically was doing and decided to prune it. So that has led to a big cut in our domestic book, primarily coming from agriculture book. So that is what has moved. Plus since the international rates also hardening, we have seen a growth there as well. So this is what has reached that 71-29 to 64-36. There is not going to be much of a huge movement in this because, obviously, our ultimate goal is to be 50-50, 50 domestic and 50 foreign, but that's a long-term goal towards which we will progress very steadily. It is not going to be a knee jerk, rush towards one area or one geography and neglecting the others. That is not how GIC operates. It's going to be a slow and steady march. So that is for the split, about the combined of 100%. Yes, definitely, as a sustainable operation, we have set for ourselves, our goal of getting to a combined of 100% as soon as possible. But as soon as possible doesn't mean overnight, obviously, it's a slow march, wherein you continuously keep on pruning your portfolio, you keep on adding better business to your portfolio, make your portfolio much healthier, look at risk selection, look at the pricing models. You would run all that through your own systems, see that there's price adequacy. So there are a lot of things that go in within our own systems to ensure that whatever we are writing is going to yield the result that we expect it to yield. And that is how you continuously churn your portfolio to a certain extent, groom it, and then take it forward. So this is a journey that we have to start, which we have started, and we are moving towards the right direction as the trends indicate. So certainly, I'm very firmly on this path now.

So now sir, just in terms of the segments, would you kind of highlight just in terms of the journey that you have articulated. Which segments are we likely to see this improvement in loss ratios going forward?

See, the 4 big segments for GIC are, as we have always maintained and said a lot many times, agri, property, motor and health. Now both motor and health do not really need much of reinsurance being pretty much retail in their nature. That leaves property and agri. That is where we are making this -- making the portfolio better, trying to write much better business and get a growth with a hugely bottom line focused handle.

[Operator Instructions] The next question is from the line of Sahej Mittal from HDFC Securities.

I couldn't completely understand the tax rate explanation, which [indiscernible] for -- on higher tax rate during this quarter and this full year?

So actually, this -- you are aware of the tax laws changed from '19, '20 regarding 10(38) is replaced by 112A, right? So insurance companies like us, we are not allowed to take that particular exemption now. And hence, our entire income, including profit on sale of long-term investments or long-term assets is also taxable. Now last year was a different calculation because we were having overall loss. This year, as per Section 44, we have to take our taxable income into account from the profit and loss account. Out of this, as based on that -- various sections, all additions will happen like wherever provisioning has been done for bad and doubtful investments or by the doubtful debts. All this provisioning, which we do it in the profit and loss account, is added back. So this is why the net figure of taxable income has gone up to that, the normal tax rate was applicable to GIC and this is how the calculation has been done. But definitely...

The long-term capital gains rate for equity is 10% from what I understand?

Correct. So we are not allowed to take that exemption because we don't say it is capital gain. It is all our net profit from the profit and loss account. I think this is what auditors, consultants and -- we have taken it up of course for getting this exemption. But on a prudent way, we are providing this particular -- adding this income into our taxable income.

Okay. And the other question was on the growth. So for the general insurers, per se, in fourth quarter, we saw that general trend at about 12.5% in fourth quarter, whereas on a year-over-year basis, while for us, there was a degrowth of about 1.5%. So is it that because we are degrowing our crop segment or what is it we [indiscernible]?

No, Mr. Mittal, you see you have -- I mean, for us, in the domestic portfolio, yes, we pruned our crop portfolio and made it much more robust. But we also grew in some other sectors where we had -- the rates were hardening and we were getting a good deal. So you tend to grow. You choose your risks wisely and move forward. So what the general insurers have grown is certainly there, and it will come to us with a lag, of course. But the fact is that we have degrown in the domestic, but grown in the foreign book. So that has offset because even the rates in the foreign have hardened and that is giving us a good bit of business coming [indiscernible]

Is it that some of this growth will come with a lag? And should we expect it on the domestic book?

No, say that again, please?

Is it that -- so was your idea that some growth in the domestic book will come with a lag? So is it fair to assume that in FY'22, some of it will come with a lag in the first quarter of FY'22?

Yes, yes. Of course, that lag will be there. I mean what you were talking about March 31 for the domestic market -- direct market, will come to us by the second quarter. I mean that lag will definitely be there. But the growth is something that we are seeing. You see, I mean, as reinsurers, what is the raw that -- raw material to feed us? That raw material is risk and as our entire -- the globe becomes more and more risk-aware, more and more risks are coming into our books. And that is where we are looking at a growth. You look at the property segment, which is largely driven by the growth coming in from infrastructure. There's so much of infrastructure happening that, that big ticket growth is going to come into GIC's books also. So growth is something that is happening. In the general insurance industry in the country, we have seen a 15% to 18% growth year-on-year. This year, of course, thanks to COVID, it was down to 12%, 12.5%. But this is again something that's going to pick up. And as it grows, as the market grows, GIC will also grow. The trick of the entire trade is to pick up your risks in a very prudent manner. The risk selection is what is becoming important for us, as also the risk pricing.

[Operator Instructions] The next question is from the line of [ Manoj Shah ] from [indiscernible] Investment.

Can you please comment on the hardening of rates? Are we done with that or still some room to go in the domestic market in the various segments, like we have increased the rates in the fire, in the motor segment, but I think last year, the rate increase was put on hold? I suppose this year also it has not flown in. So can you please comment on the hardening of the rates in the domestic market in the various segments? And second question is like, as you have seen that in the international segments also because of lot of rates, the hardening of rates is taking place. And you are commenting that it will take another 4 to 6 quarters before this rate hike cycle is completed. So what happens, like suppose once the rate hike is done and based on the claims ratio, if claims subside, then does this hardening of rates are rolled back? Or once it got elevated, it remains there. So just wanted to understand [indiscernible]

So can you take that please, and start with international, please?

Essentially, this expectation of the hardening to roll out within the next 4 to 6 quarters is, thanks to the less than expected written-on equity by the reinsurance sector in general at a global level during the last 4 years, starting from '17, '18, '19, '20. So it will be difficult to comment as to what will happen after the cycle of fourth quarter is over. It will depend on the way the U.S. market, particularly the U.S. hurricane season this year pans out, whether it is below matching or higher than long-term average of the U.S. hurricane season and other significant catastrophe-prone areas, particularly for Japan. Apart from this, expected cash seasons, there are also events happening from say secondary [ perils ] and other kind of not very prominent well-known, well-publicized events like tornado and winter storm and all those things. So what will happen after 4 to 6 quarters, it will depend on where this 6 quarters give the return on equity to the regional sector and how the capital supply develops. Maybe it can be expected to play too, unless there is a force, which will maintain the hardening or if the capacity flows in a much bigger way, there can be softening. But the reinsurance market is a global market. The risk is sliced and diced and is shared by a number of reinsurers. So it is not that this -- after this cycle is over, GIC will get affected. The entire regional sector is moving in tandem with some variation across geographies and classes. I hope it helps.

Regarding the hardening of the rates in the domestic market, are we done with that? Or we expect in the motor segment or in other segments, the rate hike will continue?

Mr. Shah, it is -- you see the rate is always commensurate with the capacity available. And how are you looking at the market panning out. So when you talk about hardening of the market, what we did by getting in the IIB rate was essentially a rate correction. In 2007, there was a tariff. And there was a discount being offered on the tariff by everybody because the market had become so competitive. So year-on-year, discounts started happening on the tariff from 40% to 50% till a stage was reached when the discounts being offered on the tariff rate was 99.5%. You can imagine what rate would be charged, which is where we saw the market on the gross profit, imminent collapse, which is what led us to take this very bold step. I mean in hindsight, it all looks fine because it's gone well. But that time, it was a very bold step that you are dictating a price for a product in a competitive market. But we did that because we owe it to the market, and the market has now stabilized. But do remember that whatever IIB states is just a burn cost. It is the premium versus claims, plain and simple. No [indiscernible] listens to that. So the rates have to still get better. But actually, the market is stabilized -- has stabilized. And at least from GIC -- and we don't intend to do any -- further move that. It is now for the insurance companies to realize that price adequacy is must for any survival.

Fine. Also on the life insurance market, we are seeing that most of the life insurance companies saying that they are increasing the premium rates for the term plan. And as for them, it's basically being -- the reinsurer are asking for a higher rate. So do we see more increase in the rates on that term plan?

See, Mr. [ Shah ], again for the life portfolio, a, we are not a very big player in the market. We are certainly a dominant player, but not a very big player. We have every foreign reinsurance branches also operating in the life space. And the market is very competitive. The market life reinsurance, what comes out is something that attracts every player in the market. And depending on what the proposal is, what is that they are looking at getting reinsured, rates are quoted. And it's an elaborate process. You have a full team here at GIC with actuaries and the full setup who look at the proposal with -- in great detail and then come up with a rate. So those rates are -- it is not something that you can give -- I mean, a very fancy rate and walk all the way to the banks with it. It has to be competitive or you lose out. So it is just taking into consideration what the risk is all about and pricing it correctly.

Okay. One more question, if you may allow me. The net commission percentage has gone up. Any specific reasons for that for the quarter as well as [ for the full year? ]

What -- Mr. [ Shah ], sorry, what has gone up?

A net commission percentage on that premium?

No, it is -- yes, it has gone up a bit, but there were certain fixed income treaties that we were writing, which have been discontinued from this year. And therefore, those adjustments in the commissions for those treaties is what is being reflected. Otherwise, the commissions normally tend to move in a very fixed band.

Yes. In the last call, also something was spoken about these fixed treaties. But are we done with that? Or we may see still coming up in next 1 or 2 quarters?

No, no, we are done with that. No more fixed margin treaty isn't being done anymore.

And any comment on the OFS part?

No. Mr. [ Shah ], my guess is as good as yours. On our part, we have heard nothing from the government.

The next question is from the line of Jatin Sangwan from Kotak Securities.

My question is related to the -- what are the total number of COVID claims in health and life insurance space for the financial year 2021?

That's a difficult question for me to answer, really. I can definitely find out and get back to you. But the number exactly would be difficult for the life COVID claims. Unless -- is Mr. Vikas there? And maybe he would have an idea? No, I don't think he is there in this meeting, but I can definitely come back to you on this.

Okay. And my second question was, are you going to the tariffs for help?

Sorry, are you going to?

Are you going to the tariffs for health insurance policies?

No. I'm sorry, I did not get that.

Are you looking to raise rates for these health insurance policies?

No. As I said earlier, health is largely a retail business. It seeks very little or almost 0 reinsurance. So whatever is there on the GIC's books is largely from the obligatory session that we get from the market. So we really have no role to play in the rates of health insurance policy. But I can tell you from my touch with the market is, what has happened is that because of the awareness being generated, people now want to buy health insurance, and they want to buy a higher limit as well, and they want those policies to have a lot of [ bells and whistles ] having this cover or that cover. So anything that you add on will obviously have a little price associated with it. And that's why you may -- it may appear that the health policy rates are going up. But that's a question of truly demand and supply, nothing beyond that.

[Operator Instructions] Ladies and gentlemen, that was the last question for today. I would now like to hand the conference back to the management for closing comments. Over to you, members of the management.

Thank you very much. On behalf of CMD GIC and management of GIC, we thank you all for sparing your time to listen to the growth story that GIC is currently writing. And we have continuously kept the investor community informed quarter-on-quarter about our results. And also have given our guidance as to how the future growth is panning out for GIC, more so for the general insurance and the reinsurance business in India. And for any kind, further clarity on these issues and the topics that were discussed, you can feel free to contact us at any point of time. With this, we conclude this meeting, with our heartfelt thanks to all of you. Thank you.

Thank you. On behalf of General Insurance Corporation of India, that concludes this conference. Thank you all for joining. You may now disconnect your lines.