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Shriram General Insurance Company (SGIC) on Thursday said its net profit declined nearly 47.5 per cent to Rs 147.48 crore in the first half of the current fiscal, mainly due to fall in investment income.
The company had posted a net profit of Rs 280.89 crore during the same period of the previous fiscal year.
The Jaipur-based general insurer wrote 17.5 lakh new policies during April-September period of 2022-23, up 27 per cent from a year-ago period.
Anil Aggarwal, MD & CEO, Shriram General Insurance Company, said there was degrowth of 35 per cent for the company as the industry was impacted in the aftermath of the Covid pandemic.
"When you degrow, you wait for the profit to come back, in the current year we are growing and it will take one or two years to come back to the same level. Growth is important after degrowth of 35 per cent, this year we are growing by 27 per cent. And the second impact on profit is due to the increase in the interest rate," Aggarwal said in an interaction.
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However, the company performed better than the industry average.
The income of the company rose by 27 per cent from a year ago to Rs 991 crore in H1FY23.
During the first half of FY22, SGIC earned Rs 48.16 crore as profits from sale of investments which dropped to Rs 10.67 crore this year, he said.
The official said it is also recruiting new employees and has targeted to onboard 1,000 people this fiscal.
"So far, we have already recruited 700 employees and we can still recruit 300 more employees by March 2023."
Besides, the insurer also increased its branches to 223 in H1FY23 from 202 last year period, taking the employee count to 3,460 from 2,766.
The board has declared an interim dividend of 19 per cent, SGIC said, adding that it is amongst the most profitable insurers having returned Rs 2,143 crore in dividends to the promoters for an investment of Rs 259 crore.
Speaking about the impact of the interest income, Aggarwal said the scenario is likely to remain as it is currently.
"So, I don't think our investment income will go up (for the full year). The overall profit for the year will decline.
On the merger of the group firms Shriram Transport Finance (STFC) and Shriram City Union Finance (SCUF), he said it will not have any impact on the business of SGIC.
Shriram group's board in last December okayed merger of its lending subsidiaries Shriram Capital (SCL) and SCUF with STFC. The merged entity would be known as Shriram Finance.
Shriram General Insurance Company is a joint venture between Shriram Capital, the holding company for the financial services business of the Shriram Group, and Sanlam, a leading financial services group of South Africa.
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