The Hindu Business Line : National Insurance sorts out Reliance Info accounting issue

NATIONAL Insurance Company (NIC) has been provided some relief in the way its 2003-04 accounts treated claims that came from its insurance of Reliance Infocomm's business.

Mr H.S. Wadhwa, NIC's Chairman-cum-Managing Director, said some provisions made in last year's accounts would be offset in the current financial year following permission given by the national re-insurer, General Insurance Corporation.

He added the amount that could be offset would be known once all claims were properly processed.

The problem came up after NIC's audit committee disagreed with the way in which the company had accounted for provisions made for claims that flowed from the Reliance Infocomm account.

The company wanted to spread the impact of Reliance Infocomm's claims over three years in accordance with its reinsurance policy, alternate risk transfer. The audit committee wanted the full provision to be made the same year, 2003-04.

NIC reported a profit after tax of Rs 71 crore (Rs 135 crore) in 2003-04. The company's premium income came to Rs 3,400 crore.

Mr Wadhwa said the Comptroller & Auditor General's report on NIC had no comments. The development reflected well on the company's audit system, he added.

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