II. NOTES FORMING PART OF THE ACCOUNTS

The Insurance Regulatory and Development Authority of India (Preparation of Financial Statements and Auditors' Report of Insurance Companies) Regulations, 2002 have been adopted for presentation of the accounts.

> Investments

1. (a) Out of Investment held in Shares, Debentures & Venture Capital Fund of the value of ? 636,914,712 thousands (Previous year

? 596,677,085 thousands) no confirmations or other documentary evidence was available regarding actual custody for;

(i) Investments in debenture of 16 Scrip of the value as per Books amounting ? 6,589 thousands (Previous year ?6,589 thousands), (The Corporation has fully provided for these amounts in earlier years).

(ii) Investments in Preference shares of five Scrip of the value as per Books amounting ? 0.004 thousands (Previous year ? 0.004 thousands) (Four Scrip Written down to ? 1/- and One Script Written Down to Zero in earlier years)

(b) The Investments actually held by the Custodian of the Corporation is in excess of the number held as per the books of the Corporation.

(i) A Bonds having value as per Books of Accounts amounting to ?1,300 thousands (Previous year ? 1,300 thousands)

(ii) One Preference Shares having value as per Books of Accounts of ? 0.001 thousands (Previous year ? 0.001 thousands) (One Scrip Written down to ? 1 in the Previous year)

(c) During the year there were receipts of Excess Dividends of ? 1,436 thousands (Previous year ? 1,413 thousands), Excess Profits ? NIL (Previous year ? 45 thousands) and Excess Interests ? NIL (? 15 thousands). The excess dividend balance as on 31.3.2023 amounts to ? NIL (Previous year ?1277 thousands). The interest received on the excess Bonds/Debentures and profit on excess equity/debentures as on 31^st March 2023 amounts to ? NIL (Previous year ? NIL) & ? NIL (Previous year ? NIL). This excess dividend is shown as Liability.

2. (a) Provision includes provision for standard assets @ 0.40% as per IRDAI-Prudential norms for Income recognition, Asset Classification

and provisioning and other related methods in respect of debt portfolio amounting to ? 592,243 thousands (Previous year ? 538,671 thousands).

(b) During the year, the Corporation has not undertaken under CDR (Corporate Debt Restructuring) System, any case of restructuring of corporate debt/loan. (Previous year NIL)

(c) The Corporation has considered latest available NAV for the provisioning of units of venture capital. The details of latest available NAV considered are as follows:

3. For valuation of actively traded equity shares, 31^st March 2023, has been considered as closing day.

5. There is no difference between title of ownership in respect of CGS/SGS/bonds/debentures etc. available in physical/demat format

vis-a-vis shown in books of accounts except for the differences pointed out in Point No 1.

6. As at 31^st March 2023, all the assets of the Corporation in and outside India are free from encumbrances except for:

(a) The Government of India Stock, 8.24% 2027 for ?171,000 thousands, 8.60% 2028 for ?2,000 thousands, 6.19 % 2034 for ?50,000 thousands, 6.64 % 2035 for ? 100,000 thousands, 7.54 % 2036 for ? 200,000 thousands, 8.33% 2026 for ?20,000 thousands, 8.28% 2027 for ?17,500 thousands, 7.95% 2032 for ?40,000 thousands, 6.67% 2035 for ? 30,000 thousands total amounting to ? 630,500 thousands (Previous year total amounting to ? 480,500 thousands) and cash deposit of ? 8,600 thousands (Previous year ? 8,600 thousands) with Clearing Corporation of India Limited as deposit towards Settlement Guarantee Fund.

Out of the Cash Deposit, ? 1,500 thousands is maintained as Cash collateral Deposit towards Triparty Repo Default fund (Previous year total amounting to ? 1,500 thousands) and ? 800 thousands towards Securities Default fund (Previous year total amounting to ? 800 thousands).

(b) (i) In view of margin requirements as recommended by SEBI vide Circular dated 19/03/2008, Corporation has assigned a Government of India security 6.30% 2023 amounting to ? 300,000 thousands (Previous year Fixed Deposits amounting to ? 300,000 thousands) and 7.10% 2029 amounting to ? 400,000 thousands (Previous year NIL) total amounting to ? 700,000 thousands as Pledge towards Margins in cash segments. This Pledge covers margin obligations arising out of trades done in NSE & BSE.

(b) (ii) Margin FDR of ? 500 thousands (Previous year ?525 thousands) against Bank Guarantee to Municipal Corporation of Greater Mumbai (MCGM) to undertake development activities at plot bearing CTS.NO.1606OF Fort Division measuring 1,844.40 sq. meter.

(c) As per SUSEP Resolution CNSP No. 330 of 2015, Article 13, foreign reinsurers shall have account in foreign currency in BRAZIL with SUSEP in bank authorized to operate with exchange in the country with minimum balance in cash for guarantee of its operations in the country in the amount of US$ 5,000 thousands or comparable in another foreign currency of free translation for reinsurers acting in the field of damages and lives.

Further as per SUSEP Circular No. 527 of February 2016, Article 4 (I) the registration of the admitted reinsurer may be granted after the submission and analysis of evidence of foreign currency account, linked to SUSEP, in a bank authorized to deal in a foreign exchange within the country with a minimum balance of US$ 5,000 thousands or equivalent in another free convertible foreign currency for reinsurers operating in all lines.

Accordingly, GIC Re has opened a bank account in BNP Paribas Brazil and deposited an amount of US$ 5,000 thousands (Previous year US$ 5,000 thousands)

(d) Margin FDR held by Bank for issue as LC/BG of ? 94,547,286 thousands (Previous year ? 77,542,036 thousands).

7. The Commitments made and outstanding for Loans, Investments and Fixed Assets (if any) as at 31^st March 2023 are ? 113,675 thousands (Previous year ? 248,432 thousands).

8. Value of contracts in relation to investments, for

a) Purchases, where deliveries are due and pending NIL (Previous year NIL).

b) Sales, where payments are overdue NIL (Previous year NIL).

9. The Book Value of Investments valued on Fair Value basis is Equity ? 124,368,329 thousands (Previous year ? 113,598,241 thousands) & Mutual Funds ? 7,680,200 thousands (Previous year ? 4,199,999 thousands). For some Actively traded shares falling under "Fair value Depreciation" category, an amount of ? 17,261,537 thousands (Previous year ? 15,079,948 thousands) is considered under "Provision for Diminution of Listed equity shares" category.

10. The basis of amortization of debt securities is as stated in Significant Accounting Policy No. 9.4.

11. The Corporation does not hold any properties for investment purposes.

12. Provisions regarding unrealized gains/losses have been stated in the Significant Accounting Policy No. 9.7.

13. ? 1,088 thousands (Previous year ? 1,088 thousands) is placed in a Liquidation fund for GIC AMC. This is to be retained till 31.12.2023.

14. Interest, Dividend and Rent income is net of Investment expenses of ? 59,732 thousands (Previous year ? 62,537 thousands).

15. A Provision has been made for ? 15,387,536 thousands (Previous year ? 16,036,240 thousands towards Non-Performing Assets (Other than Standard Assets). Therefore, there is reversal of provision accounted during the year is ? 648,704 thousands (Previous year incremental provision ? 1,773,018 thousands).

16. During the Previous year the Corporation has made changes is significant accounting policies with respect to impairment loss (i.e., other than temporary diminution in value) in accordance with the applicable provisioning of diminution in value of equity as per clause 2.8 of IRDAI Master Circular on Preparation of Financial Statements General Insurance Business, October 2012 resulting into valuation of equity shares at market price on balance sheet date.

Consequently, a sum of ? 357,465 thousands (Previous year ? 15,079,949 thousands) has been recognized as expense in the profit and loss account resulting in reduction of profit to the extent of ? 357,465 thousands (Previous year ? 15,079,949 thousands). Apportionment of ? 357,465 thousands (Previous year ? 15,079,949 thousands) between profit & loss and revenue account has not been done in absence of the required field under Revenue Account as per format advised by IRDAI. Out of ? 357,465 thousands (Previous year ? 15,079,949 thousands), an amount of ? 253,764 thousands (Previous year ? 11,61 1,236 thousands) pertain to Revenue account (policyholder's fund) and ? 103,701 thousands (Previous year ? 3,468,713 thousands) pertains to Profit & loss account (Shareholder's fund).

17. Provisioning for IIFCL Mutual Fund (IDF) Series II

The Corporation has total exposure by way of investments in IIFCL Mutual Fund (IDF) Series II amounting to ? 179,017 thousands as on 31^st March 2023. GIC Re's Book value is ? 179,017 thousands as against Nominal value of ? 200,000 thousands in IIFCL. The NAV of Series II has been on a declining trend since March 2019 and stood at ? 8,95,084.44 per unit as on 31.03.2023. IIFCL Board of Trustees have decided to prematurely wind-up existing schemes (Scheme I & II) to avoid being non-compliant with SEBI regulations. As per recent communication from IIFCL on 17.5.2023, the NAV as on 30.4.2023 stood at ? 9,00,954.24 per unit as on 30.4.2023. The Corporation has made a provision of ? 19,800 thousands in IIFCL Mutual Fund (IDF) Series II based on NAV as on 30.4.2023. The above provision, in the opinion of the management is considered appropriate and is made as per the Prudential Norms for Income, Recognition, Asset Classification and Provisioning issued by RBI and IRDAI.

Reinsurance

18. Underwriting of Direct business stopped from 1^st April 2001. Figures included in Revenue Accounts Pertaining to direct business (if any) are on account of run-off business. Run-off liabilities are sufficiently provided for based on advice received.

19 Structured solution cover

The Structured Solutions Reinsurance Contract covering risk from various class of business was in place for the years from June 2014 to May 2020 as per agreed terms and conditions. After notice of cancellation by IRDAI as at 31.5.2021, the contract has been cancelled during the period 2021-22. Consequently, complying the condition of the contract and after having obtained due confirmation from Reinsurer, the Corporation had booked profit commission of ? 12,409,926 thousands (including prior period profit commission of ? 729,910 thousands) in the previous financial year 2021-22 and released the reinsurers of remaining Outstanding Claims liabilities to the extent of ? 5,294,389 thousands. For the period 2022-23 there are NIL entries.

20. Premiums, less reinsurance, written from business during the financial year 2022-23 in India are: ? 232,947,051 thousands (Previous year ? 246,453,546 thousands) and outside India are ? 103,497,226 thousands (Previous year ? 141,536,746 thousands).

21. Incremental Provision in URR, for 31.3.2023, in respect of long-term Facultative Policies. -

Whilst on above, for long-term Facultative policies, where the Premium income is spread over a period covering more than 2 accounting years, URR has been provided using 1/365 days basis.

22. Claims less reinsurance during the financial year 2022-23 paid in India are:

? 175,863,074 thousands (Previous year ? 210,503,658 thousands) and outside India are ? 88,800,715 thousands (Previous year ? 100,219,684 thousands).

23. Segment Reporting as per Accounting Standard -17 "Segment Reporting" of ICAI, has been complied with as required by IRDAI (Preparation of Financial Statements and Auditor's Report of Insurance Companies) Regulations, 2002.

Line of Business wise Segment Revenue Reporting for the year ended 31.03.2023

24. Ageing of claims - Distinguishing between claims outstanding for different periods:

The Corporation being a reinsurance company does not settle claims directly with the insured. The companies after settling the claims with their insured would recover the claims from the Corporation as per the reinsurance obligations. Such recoveries are settled with the companies through periodical account statements.

26. (a) Corporation has put in place system of continuous reconciliation and monitoring of balances and reserve deposits on an

ongoing basis with persons/bodies carrying on insurance/reinsurance business. The Corporation has provided a cumulative provision of ? 11,306,742 thousands (Previous year ? 7,994,203 thousands) for doubtful receivables.

(b) The balances of amount due to/from and the deposits kept with other persons/bodies carrying on insurance business are subject to confirmation/reconciliation. The Company has initiated a detailed process to match confirmations with the books and balance confirmations are marked for majority of the balances. Adjustments, if any for unconfirmed balances will be accounted for on receipt/confirmation/reconciliation of the same after due examination.

(c) The Corporation has also provided a provision on doubtful debts on sundry debtors outstanding for more than 1 year as on 31.03.2023 amounting to ? 13,066 thousands (Previous year ? 6,740 thousands.).

27. Creation of a CAT reserve is an accepted method to handle future volatility in claims, and to introduce a factor of stability in the financial results. The reserve can make a significant contribution to reducing financial vulnerability in future. This reserve is broadly intended to be utilised towards meeting large catastrophe losses against the insurance policies in force.

29. Life Reinsurance Business

During the year, the Corporation has made a provision of ? 3,252,240 thousands (Previous year made provision of ? 3,678,726 thousands) towards gross unexpired premium reserve for life business as determined by Life Appointed Actuary, as per IRDAI guidelines.

30. The estimate of claims Incurred but Not Reported [IBNR] claims have been certified by the Company's Appointed Actuary. The Appointed Actuary has certified to the Company that the assumptions used for such are appropriate and are in accordance with the requirements of the Insurance Regulatory and Development Authority of India [IRDAI] and Institute of Actuaries of India in concurrence with IRDAI.

The IBNR provision for Life Re business is certified by the Appointed Actuary - Life Re. The IBNR has been calculated using triangulation method for domestic business (except for non-proportional business) and for Overseas Group Credit Business.

For all other overseas business (proportional and non-proportional) and domestic non-proportional business, delay days method has been used.

> Secretarial

35. During the financial year 2018-19, the Corporation issued bonus equity shares in the ratio of 1:1 i.e.1 (one) equity share of ? 5/-each (fully paid up) for every 1 (one) existing equity share of ? 5/- each (fully paid up) to the Shareholders of the Corporation, in the month of July 2018.

During the financial year 2022-23, the Corporation has not issued any such bonus shares. As on 31^st March 2023 and 31^st March 2022, the Issued, Subscribed, Called-up and Paid-up Capital of the Corporation is ? 8,772,000 thousands comprising of 1,754,400 thousands Equity shares of ? 5/- each.

Accordingly Earning Per Share, Book Value per share and Dividend per share is worked out for the previous years based on the increased number of shares.

39. In terms of Para 9 of AS-18, no disclosure has been made in the financial statements of state-controlled enterprises as regards related party relationships with other state-controlled enterprises and transactions with such enterprises.

40. Proposed Dividend for the year 2022-23

The Board of Directors of the Corporation have recommended final dividend at the rate of ? 7.20 per equity share (on face value of ? 5/- each) for the Financial Year 2022-23. Earlier during the current financial year, the Corporation had paid interim dividend of ? 2.25 per equity share (on face value of ? 5/- each) for the Financial Year 2021-22.

Basic earnings per share are calculated by dividing the profit or loss after tax for the year attributable to equity shareholders by the weighted average number of equity shares outstanding during the year. For the purpose of calculating diluted earnings per share, the profit or loss after tax for the year attributable to equity shareholders and the weighted average number of shares outstanding during the year are adjusted for the effects of all dilutive potential equity shares which could have been issued on the conversion of all dilutive potential equity shares.

Potential equity shares are deemed to be dilutive only if their conversion to equity shares would decrease the net profit per share from continuing ordinary operations. Potential dilutive equity shares are deemed to be converted as at the beginning of the period unless they have been issued at a later date. The dilutive potential equity shares are adjusted for the proceeds receivable had the shares been actually issued at fair value. Dilutive potential equity shares are determined independently for each period presented.

The face value of equity share is consolidated from ? 1 to ? 5 per share. Accordingly, the Earning Per Share, Book Value per share and Dividend per share are based on the face value of ? 5 per share. During the Year ended 31.03.2019, the Corporation has issued bonus shares in the ratio of 1:1. Accordingly the Earning Per Share, Book Value per share and Dividend per share is based on the increased number of shares.

43. The Corporation's office premises are obtained on operating lease and are renewable/cancellable at mutual consent. There are no restrictions imposed by lease agreements. Lease terms are based on individual agreements. Significant leasing agreements are in respect of operating lease for premises. Aggregate lease rentals amounting to ? 25,748.63 thousands (Previous year ? 23,919 thousands) are expected to be paid under operating lease in less 12 months from 31^st March 2023.

As per AS-19 related to Lease, GIC Re is not required to make any disclosure under AS-19.

During the year the Corporation has recognised Deferred Tax asset of ? 4,598,741 thousands against Provision for doubtful investments of ? 18,272,176 thousands where the Corporation expects certainty of loss realisation and tax benefits to flow. Further, Deferred Tax asset of ? 1,289,984 thousands is also accounted against CAT Reserve of ? 5,125,494 thousands.

(b) The Taxation Laws (Amendment) Act, 2019 provides domestic companies with an option of lower tax rate, provided they do not claim certain deductions and not compute tax as per Minimum Alternate Tax (MAT). Accordingly, the Corporation has considered the reduced rate for the purpose of computing provision for tax and deferred tax in these standalone financial results for the quarter and twelve months ended 31^st March 2023.

45. During the year, the Corporation has reviewed its fixed assets for impairment. In the opinion of the management of the respective companies no provision for impairment loss is considered necessary.

46. The basis of apportionment of operating expenses to the Revenue Accounts has been stated in the Significant Accounting Policy No. 8.

47. Contingent Liabilities:

(a) Partly Paid-up investments ? NIL (Previous year NIL)

(b) Underwriting commitments outstanding ? NIL (Previous year NIL)

(c) Claims, other than those under policies not acknowledged as debts ? 6,186 thousands (Previous year ? 6,186 thousands)

(d) Guarantees/LC given by or on behalf of the Corporation ? 93,800,807 thousands (Previous year ? 75,960,027 thousands).

(e) Statutory demand/liabilities in dispute - Income-tax demands disputed, not provided for ? 86,918,929 thousands (Previous year ? 108,136,264 thousands).

During the current year, the Corporation has not considered following as Contingent liabilities (Previous year amounts are prior to giving effect of following items):

(i) Show cause notices where order is not received.

(ii) Demands where Corporation has received favourable orders in appellate tribunal and department has challenged in High Court.

(f) The Corporation has received various show cause notices issued by GST/Service tax department during the current year amounting to ? 22,904,814 thousands (Previous year ? 51,284,270 thousands) and the Corporation is contesting the same with the authority.

During the current year, the Corporation has not considered following as Contingent liabilities (Previous year amounts are prior to giving effect of following items):

(i) Interest accruals on the statutory demands from the date of demand to current date.

(ii) Show cause notices where order is not received.

(iii) Demands where Corporation has received favourable orders in appellate tribunal and department has challenged in High Court.

(g) Reinsurance obligations to the extent not provided for in the accounts NIL (Previous year NIL) in view of Significant Accounting Policy No. 2.2.

(h) GIC has 172 legal matters pending before various courts and tribunals other than above matters among which GIC is having contingent liability in 6 legal matters and the contingent liability amount is estimated up to ? 1,871,829 thousands (Previous year ? 8,725,234 thousands) and rest of the matters are of negligible financial impact.

> GENERAL

49. The Corporation generally makes payments to its creditors within a period of 45 days as stipulated in Micro, Small and Medium Enterprises Act 2006. The Corporation has identified Micro, Small and Medium Enterprises as defined in above referred act. The Corporation has neither received any claims for interest nor provided any interest payable to Micro, Small and Medium Enterprises as required by aforesaid act.

50. Corporate Social Responsibility (CSR):

As per Section 135 of the Companies Act, 2013, General Insurance Corporation of India was required to spend an amount of ? 83,200(in thousands) for the financial year 2022-23 towards Corporate Social Responsibility. During the financial year 2022-23, an amount of ? 21,146 (in thousands) has been spent. The projects are in different stages of implementation. The total unspent amount as on 31.03.2023 is ? 62,053 (in thousands) pertaining to on-going projects. This unspent amount has been transferred to a separate bank account to be utilized in the next three financial years.

51. Regarding the collection of shortfall premium, the recovery from the concerned broker stands at USD 391,131 (? 32,104 thousands at current rate of exchange). Outstanding premium recovery as on 31.03.2023 is USD 121,835.15 (? 1,00,00 thousands at current rate of exchange).

(ROE 1 USD = 82.08 INR)

52. There are no Material Changes and Commitments Affecting the Financial Position Of The Company occurring after the Balance sheet date (Previous year Nil).

53. During the previous year ended 31^st March 2022, 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. Decision to place the Dubai Branch into run off, was informed to IRDAI vide letter dated 6^th July 2021. Board of GIC Re also accorded its approval and to carry out suitable statutory requirements if any on 7^th July 2021 by circular resolution. GIC Re India will continue the activity/operations relating to Dubai branch from GIFT City, India. Accordingly, a Portfolio Transfer Agreement has also been entered on 14^th September 2022 between GIC Gift City Branch and Dubai Branch.

54. During the financial year 2020-21, M/s "AM Best" has downgraded the Financial Strength Rating (FSR) of A- (Excellent) to B (Good) and the Long-Term Issuer Credit Rating (ICR) of "a-" to "bbb ". During the current financial year 2022-23, the outlook of the Long-Term ICR was revised to 'Stable' from 'Negative' whilst the FSR outlook is Stable. The previous year downgrade did not materially impact the financial position of the Corporation, due to special position of the Corporation in the Indian market and various steps taken by management.

55. The Corporation has prepared Cash flow statement adopting the indirect method.

56. Tax liabilities in respect of foreign operation, if any, is accounted on actual basis.

57. During the current year, prior period profit commission of NIL (Previous year ? 729,910 (in thousands)) is accounted in respect of Structured Solutions Reinsurance Contract. (As stated in Note no 19).

Other than this Prior period items have not been separately disclosed, as the amount is not material.

58. Premium in respect of Reinsurance Contracts is accounted as per Statement of Accounts (SOAs) received from the cedants & intermediaries and accrued Premium where SOAs are due but not received for the reporting period. Accrued premium is worked out proportionately on the basis of our share in Estimated Premium Income (EPI) for the full contract period as per contract terms. The proportionate working of such EPI also considers past trend of premiums ceded in quarterly SOAs. The Corporation has Board Approved Methodology to work out Premiums on Accrual Basis for various types of Contracts over the contract period. Such working of accrued premium is accounted as provision for Premium Income at each reporting period consistently.

59. The summary of the financial statements of the Corporation for the last five years is as per Annexure I.

60. The Accounting Ratios of the Corporation are stated in Annexure II.

61. Figures relating to the previous year have been regrouped/rearranged, wherever necessary.