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New Delhi , Sept. 1

ORIENTAL Insurance Company Ltd (OIC) has clocked a net profit of Rs 64 crore for fiscal 2002-03 as against a net loss of Rs 235 crore during the previous fiscal. The company has registered a profit before tax of Rs 176 crore during 2002-03.

At a press conference, the Chairman and Managing Director, Mr S.L. Mohan, said the board of directors had recommended a 20 per cent dividend to the Union Government, which holds the entire Rs 100-crore paid-up equity capital of the insurance company.

He said the board meeting held here on Monday formally consented to the transfer of the shares held by General Insurance Corporation (GIC) to the Union Government pursuant to the amendments to the General Insurance Business Nationalisation Act.

Mr Mohan said Oriental's gross premium grew by 14.79 per cent to Rs 2,868 crore.

The net-incurred-claims ratio declined to 77.25 per cent from 100.52 per cent in the previous year. At the same time, management-expenses ratio fell by 1.62 per cent from 24.37 per cent in 2001-02 to 22.75 per cent in 2002-03. The expenses include a provision of Rs 173 crore for pension, leave salary, gratuity and voluntary retirement scheme (VRS).

Mr Mohan said the company hoped to continue with its growth momentum achieved this year during the subsequent years. "With competition growing, there has been a visible increase in the size of the general insurance market. We would be moving aggressively into areas such as personal lines and the health sector," he said.

Explaining the financials of the company, OIC's Financial Advisor, Mr R.G. Viswanathan, said the net profit would have been much higher but for the new accounting standard (AS 24) under which the company had a huge deferred tax liability on account of the previous year's losses.

He said Oriental was far stronger at the end of March 31, 2003, than in any previous year, with the market value of investments having shot up by around Rs 901 crore to Rs 5,645 crore. However, he pointed out that a large portion of the profits came directly out of the insurance business and not from sale of investments.

Out of the gross profits of Rs 176 crore, the profit from sale of investments was Rs 86 crore.

Mr Mohan said the outgo on account of the scheme for Class-II Development Officers was Rs 49.54 crore. He said the insurance industry was contemplating a second round of VRS for Class-I, III and IV officers.

"The VRS programmes would significantly lower the costs in the long run," Mr Mohan said.

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