India’s largest general insurer New India Assurance Company Ltd. posted a net profit of Rs 336 crore in the March quarter even as its underwriting losses rose.
The profit is not strictly comparable with the Rs 553 crore it reported in the year-ago period due to a change in company’s accounting policy for unexpired risk reserve, SN Rajeswari, chief financial officer, told BloombergQuint. The insurer had benefited from a one-time gain of Rs 531 crore in the quarter ended March 2017.
Underwriting losses increased 10 percent year-on-year to Rs 778 crore in the three months ended March. Underwriting losses in the health insurance segment jumped 382 percent to Rs 583 crore while that of the crop segment surged 512 percent to Rs 147 crore.
Price corrections ranging between 10-40 percent in group health insurance policies and a 8 percent rate hike in third-party motor insurance premium aided the underwriting performance, G Srinivasan, chairman and managing director, told BloombergQuint in an interview.
- Operating profit nearly doubled to Rs 66.8 crore in the fourth quarter.
- Gross written premium rose 11 percent at Rs 7,346 crore.
- Combined ratio, driven by better claims and expense ratio, improved marginally to 112.23 percent in the January-March quarter from 113.07 percent in the year-ago period. A combined ratio of less than 100 percent indicates that an insurer’s premium was higher than losses and expenses put together.
- The ratio fell by 8 percent to 111.21 in the year ended March 31.
“A drop in claims ratio in motor and health segments resulted in significant improvement in our combined ratio and overall profitability,” Srinivasan said. The company aims to bring it to 105 percent in the financial year 2018-19.
The insurer’s loss ratio, that indicates the claims paid in relation to premium collected, improved to 85 percent from 87 percent on a year ago.
New India will focus more on improving its agency distribution channel and plans to add 10,000 agents next year, he said. Emphasis on technology-led business, along with increasing low cost micro-offices in rural and semi-urban areas, will pave way for growth in the coming year, Srinivasan added.
The board also approved a final dividend of Rs 5 per share, in addition to Rs 3.75 per share declared as interim dividend. Existing shareholders would also get one bonus share for each share held by them.
- Solvency ratio improved to 258 percent from 219 percent earlier.
- Annualised return on equity nearly doubled to 16 percent.