India’s largest general insurer, New India Assurance Company Ltd.’s profits nearly tripled to Rs 748.27 crore in the quarter ended September due to lower underwriting losses.
The underwriting losses fell 41 percent to Rs 626 crore compared to the corresponding quarter last year driven by a drop in the incurred claims and expense ratios in the motor and health insurance business.
The incurred claims ratio, which indicates the total claims paid by the company, fell 800 basis points to 87.45 percent. The insurer’s expense ratio also dropped by 500 basis points to 17 percent over the same period.
This led to a reduction of about 1,100 basis points in the combined ratio, which reflects the profitability of an insurer's underwriting business, which stood at 112.57 percent. A combined ratio of over a 100 percent indicates underwriting losses.
“Price increase has greatly helped us bring down our loss ratio,” G Srinivasan, chairman cum managing director of the company told BloombergQuint. In the retail health business, the prices have been increased by about 25 percent from April 1, 2017. For corporate health business, prices were being revised in the past 6-9 months and many policies have seen a price hike of 20-40 percent, he said.
The insurer’s solvency also improved to 2.24 times as compared to 2.04 in the year-ago quarter. India’s insurance regulator mandates all insurers in the country to maintain a solvency margin of 1.50.
- The company's gross written premiums rose 12.18 percent to Rs 6,489 crore.
- The operating profits jumped 332 percent to Rs 396 crore, against a loss of Rs 170 crore in the same period last year.
- Return on equity stood at 20 percent, compared to 9 percent in the year-ago quarter.
- Investment income for the insurer stood at Rs 1,530 crore, up by 16 percent.
- The state-run insurer also approved an interim dividend of Rs 3.75 per equity share of a face value of Rs 5 each.