NIC to shore up corporate portfolio, says CMD

State-owner National Insurance Company (NIC) is looking at 15-16 per cent growth this fiscal, by focussing on corporate insurance and improving its distribution channel.

According to K Sanath Kumar, Chairman and Managing Director of NIC, the general insurer will also focus on “new businesses”, including online policies, to ensure that it grows on par with the market.

The general insurer has been growing at 6-8 per cent against the industry’s 12-13 per cent.

“Our target this fiscal is to grow at par with the industry; and focus on the corporate sector. It’s a risky but conscious manoeuvre,” he said on the sidelines of an insurance summit organised by the Bengal Chamber of Commerce and Industry (BCC&I).

Amongst the largest general insurers in the country with a 13.13 per cent market share, the corporate-retail portfolio mix of NIC stands at 30:70. According to Kumar, the plan is to shore up the corporate insurance portfolio to 45 per cent and bring down retail to 55 per cent in another three years. “By FY20, corporate insurance should be 45 per cent of our portfolio,” he said.

While the CMD admits focussing on corporate insurance to be a risky move (because of high claims and deep discounting), it will bring in large “cash flows” and increased premium income.

The company will also add 15,000 agents to its existing tally of 46,000, while focussing also on tying up with banks to sell insurance products. At present, NIC has tie-ups with 20 banks, which include Bank of Baroda and Bank of India.

Kumar further added that the insurance company was expecting profits to take a hit in FY16 primarily on account of increased claims from motor (owned and third party) and health insurance, apart from the Chennai floods (to the tune of ₹80 crore).

In FY15, NIC’s profit before tax stood at ₹400 crore.

Its incurred claims ratio till the third quarter (ending December 31, 2015) increased to 86 per cent against an average of 81 per cent earlier.

Meanwhile, NIC is also gearing up for either an initial public offering (IPO) or a strategic stake sale. “It is a decision which will be taken by the government. We are in discussions,” he said.

The stake sale process — that includes appointment of a merchant banker for valuation and so on — will start “soon”, following green signal from the Finance Ministry.

While there is no immediate capital requirement, funds will be required for “future expansion” and to meet solvency requirements in accordance with IRDAI guidelines.

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