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United India Insurance expects profit despite higher claims from natural calamities

The company is expecting net profit of Rs 650 crore and total premium of Rs 11,000 crore by year end

BS Reporter  |  Chennai 

Even as major natural calamities ravaged two parts of the country, pushing up claims during the current financial year, United India Company Ltd is expecting a profit after tax of Rs 650 crore.In the last financial year, its profit was Rs 528 crore. The company is expecting claims of around Rs 1,100 crore from both the calamities.

“In Andhra Pradesh, we have received claims for around Rs 440 crore so far, related to the damages due to the cyclone. It is likely to go up to Rs 750-800 crore. In Jammu and Kashmir, the claims were around Rs 300 crore for us,” said Milind Kharat, chairman-cum-managing director, United India Company.

In Andhra Pradesh, the claims were mainly from the Vizag Steel Plant and some power projects. In Jammu and Kashmir, the total loss and claims were of around Rs 1,500 crore, in which the company has a share of Rs 300 crore.

Kharat said the company is expecting to post a 23 per cent growth in net profit during the end of the year, owing to better underwriting and prompt measures to reduce cost.

The company has also reinsured the losses in the natural calamities, under which the claims more than Rs 25 crore are covered by the reinsurers.

year’s Rs 528 crore. This even after meeting the claims in Jammu and Kashmir and Andhra Pradesh,” he said.

The company has also reinsured the losses in the natural calamities, under which the claims more than Rs 25 crore are covered by the reinsurers.

Kharat added that the payment of the claims to the customers in the calamity-affected areas would also create more awareness among the locals about insurance. This, in turn, would help in more people taking policies.

The company’s profit after tax for the half-year ended September 2014 was at Rs 376.24 crore, as compared to Rs 364.54 crore for the same period the previous year, an increase of 3.21 per cent.

The profit for the period was hit by the claims after the Jammu and Kashmir floods and an amount of Rs 104 crore provide as wage revision. Out of the total loss reported of Rs 300 crore by way of 2,726 claims in Jammu and Kashmir, the company has paid around Rs 102 crore.

The total premium for the first half of current financial year stood at Rs 5,291 crore, with a growth of 11 per cent from Rs 4,768 crore posted during the same period of previous financial year.

Despite the increased claims, the company was able to reduce the claims ratio from 83.75 per cent to 81.70 per cent during the first half of the financial year, Kharat said. The investment income has seen a growth to Rs 1,067.4 crore during the six months, as against Rs 914.98 crore for the corresponding period of the previous year, an increase of over 16 per cent. The market value of the total investment portfolio of the company is Rs 25,586 crore and the net worth of the company stood at Rs 5,738 crore as against Rs 5,361 crore at the end of last year.

“The H1 results show that the company’s strategies are yielding the desired ends and the company is optimistic to comfortably complete a premium of Rs 11,000 crore in the current financial year,” said Kharat.

He added that the company would continue its thrust on the retail, micro small and medium enterprises, and rural insurance segments and is in the process of recruiting 323 officers and 600 administrative staff this year. It is also planning to launch 200 micro offices in Tier-4 towns during the year, of which 85 have already been launched.

It would also launch new products including motor and health insurance and a package for small and medium enterprises.

Overseas Venture
United India is looking at establishing its presence in overseas, with plans to enter Sri Lanka by the end of this year or year.

Kharat said the would also look at markets in West Asia. However, plans had not been finalised and it would be looking at setting up branch or a subsidiary company in these countries.

“The company also has to look at the regulations related to the foray,” he added.

First Published: Wed, October 29 2014. 00:47 IST