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NIA December profit rises to Rs 61.4 bn from loss of Rs 236.9 mn y-o-y

Company expects industry-wide boost from Budget, as claims ratio improves in main segments

Advait Rao Palepu  |  Mumbai 

New India Assurance
New India Assurance Logo | Photo Wikimedia Commons

State-owned general insurer New India Assurance Company registered a profit of Rs 61.73 billion for the third-quarter ending December 31, 2018, as against a loss of Rs 236.9 million during the same period of the previous fiscal year.

Gross Written Premiums (GWP) rose by 23 per cent, from Rs 52.13 billion in Q3 FY17 to Rs 63.85 billion in Q3 FY2018. GWP rose by 17 per cent, from Rs 164.16 billion for the nine-months ending Q3 FY17 to Rs 192.08 billion up to Q3 FY17.

G Srinivsan, chairman and managing director of New India Assurance, said that they were able to bring down their combined ratio, which was possible due to a drop in their claim ratios and management expense ratios.

"This is due to the focus on the key lines of business like health, motor and fire. The claim ratios have seen an improvement in these segments," he said.

Combined ratios indicates an insurer’s underwriting performance, improved to 109.13 per cent at the end of Q3 FY18, compared to 123.95 per cent in Q3 FY17.

The market has improved, Srinivasan said, and there has been a price correction in the group health space.The solvency ratios for NIA rose to 2.39 in Q3 FY18, as compared two 2.17 in the same period a year ago.

The country’s largest general insurer was listed on the stock exchanges in November 2017, and had previously declared an interim dividend of around Rs 3 billion at its September quarterly result announcement.

Underwriting losses have come down to Rs 46.43 billion in Q3 FY18, from Rs 10.37 in Q3 FY17.

The Incurred Claim Ratio, which measures the total value of all claims paid by an insurance company divided by the premium collected in the same period — has come down to 82.82 per cent in the third quarter of FY18 as against 108.21 per cent in the corresponding quarter of the previous year. During Q2 FY18 the ICR was 87.45 per cent.

The Adjusted Combined Ratio (ACR), which Srinivasan has on occasion stressed as the best measure of any insurance company performance, takes into account the investment income earned on the policyholders’ reserves. Insurance companies have technical reserves, which account for outstanding claims and reserves for unexpected risk for which a technical reserve is maintained.

The adjusted combined ratio (ACR) has reduced from 108.21 per cent in Q3 FY17 to 92.85 per cent in Q3 FY18, however, the third-quarter ACR is higher than it was during Q2 FY18, where it stood at 91.45 per cent.

Return on Equity during the third-quarter of FY18 was negative -0.82 per cent, it turned around during Q2 FY18 to 23.43 per cent, to only fall in Q3 FY18 to 17.51 per cent.

Expenseses of Mangement Ratio has come down from 25.47 in Q3 FY17 to 22.70 in Q3 FY18.

Srinivasan told a group of journalists that the National Healthcare Protection Scheme announced in the Union Budget meant that the general insurance industry is poised for a great growth.

"It will contribute to insurance penetration going up in a big way. The insurance sector will also be greatly benefitted by various measures announced in the budget to improve rural economy and infrastructure," he said.

First Published: Mon, February 05 2018. 18:12 IST
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