A massive decline in claims has helped the state-run general insurer New India Assurance Company swing back into the black with a ₹ 617 crore net profit for the three months to December 31, 2017, as against a net loss of ₹ 24 crore a year ago.
This is the first time the company is announcing results after it went public last November with a ₹ 9,600-crore IPO which was oversubscribed by around 1.19 times.
During the quarter, its gross written premium grew 23 per cent to ₹ 6,385 crore from ₹5,213 crore a year ago.
“The higher profit has largely come from a drop in the combined ratio following a decline in the incurred claims ratio and management expenses with various cost-control steps taken by us,” New India Assurance chairman-cum managing director G Srinivasan told reporters here today.
The combined ratio dropped to 109.1 per cent in the quarter from 123.9 per cent in the same period last year.
Claims ratio came down to 82.8 per cent from 95.61 per cent while the operating expense improved to 17.50 per cent from 21.2 per cent last year, he said.
The adjusted combined ratio stood at 92.9 per cent compared to 108.2 per cent in the same period last year.
Going forward, Srinivasan said, the company will work towards improving profitability by bringing down both the expenses and claims ratios, which in turn will improve the combined ratio and adjusted combined ratio.
“We are upbeat about the industry and are looking at an year-on-year growth of 20 per cent over the next 12 months,” he added.
About the Budget, he said the finance minister has opened up a lot of growth opportunities for the industry.
“The proposed National Health Protection Scheme, seeks to cover 10 crore families or 50 crore people. This is very positive and increased tax exemption for medical expenses for senior citizens will also deepen health insurance penetration,” he said.
He said the new motor insurance service provider guidelines by the regulator IRDAI, issued during the reporting quarter, will result in the reduction of the amount that an insurer spends in procuring business and also help them bring down the loss ratio in the motor segment.
“We are already witnessing improvement in motor OD (own damages) losses to some extent,” he said.
On the government plan to merger the three state-run general insurers, he said, this should certainly create a bigger company. Taking the merged entity public will help it raise growth capital, which the industry is lacking now.
“The merger plan should help the market and improve profitability, reduce competitive intensity and create better opportunities for the sector,” he added.
Meanwhile, Srinivasan said the company has three new products in the pipeline-a title insurance, a revamped cover senior citizens and a new health product-- which are expected to be launched next fiscal.
New India scrip slipped 2.53 per cent to ₹ 650.60 on BSE on Friday as the benchmark Sensex plunged 2.34 per cent following the after Budget mayhem in the market.