Comments
In the run-up to its proposed initial public offering this financial year, Kolkata-headquartered National Insurance Company is planning to further strengthen its balance sheet by reducing its exposure to loss-making group health insurance and hasten provisions for liabilities on account of incurred but not reported (IBNR) claims.
K Sanath Kumar, Chairman and Managing Director, said as part of its roadmap to an IPO, his company is cleaning up its balance sheet.
To build up the solvency margin, which improved to 1.90 in FY17 from 1.26 in FY16, the company exited 119 group health insurance policies as these could not be re-priced. It also raised subordinated debt amounting to ₹895 crore in March 2017, stepped up claims processing to reduce the burden of IBNR, and churned investment.
Before end of fiscalIBNR claims are an estimate of the liabilities owed by an insurer for claim-generating events that are anticipated but have not been reported.
Solvency margin is the amount by which the assets of an insurance company exceed its liabilities. The insurance regulator has prescribed a minimum solvency margin of 1.50.
On the IPO, Kumar said he expects it to go through before the end of this financial year. Details regarding how much shareholding the government will divest and the resources the company will raise via the IPO are being worked out, he added.
He said though the company has time up to March 2019 to provide for IBNR liabilities, which are estimated at ₹2,771 crore, could go down by March 2018. Last year, it provided ₹5,200 crore towards these liabilities.
M Vasantha Krishna, Director and General Manager, said the company will try to increase its market share to 15 per cent in three years from 12.3 per cent now.
Meanwhile, National Insurance reported a 19 per cent increase in gross premium at ₹14,282 crore in FY17 as against ₹12,019 crore in the previous year.
The company is eyeing a gross premium of ₹16,000 crore in FY18. Its net profit was, however, down at ₹49 crore compared to ₹150 crore last year.
Comments
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.