Shriram General Insurance Company, whose business almost entirely consists of motor insurance, is seeing annual growth of 30 per cent in gross written premium. To bolster this growth, the company intends to hire 700 people this year.
Addressing journalists today, Anil Aggarwal, MD & CEO of the company, said 500 persons would be recruited for marketing, and the rest would be support staff.
In 2022-23, the company earned a premium income of ₹2,267 crore. The company expects to grow 30 per cent in the current year and the next, Aggarwal said. The expected growth is also the reason the company’s solvency ratio—ratio of capital to risk accepted, a measure of capital adequacy—stands at an elevated level of 4.83, against the statutory requirement of 1.5.
Aggarwal said that the company’s confidence that it would grow 30 per cent in the current year stems from the 39 per cent growth in premiums collected in the first quarter of the current year.
He said that today 90 per cent of the premiums come from motor insurance; the company intends to bring it down to 85 as early as possible by diversifying into other lines, such as health, cyber-security and travel—or any line except crop insurance, where “we burnt our fingers in 2016-17”.
Shriram General is a joint venture of the Chennai-based Shriram group, predominantly into financial services, and Sanlam of South Africa. Shriram Finance, the group’s flagship company, is a non-banking finance company that specializes in lending for the purchase of used trucks, a high-risk, high-reward business that the company has perfected over the last quarter century. Shriram General’s DNA is, therefore, ‘motor’.
In the first quarter of the current year, it made a net profit of Rs 98 crore, compared with Rs 71 crore in the corresponding quarter of last year. Profits come from investing the premiums, while there is an underwriting loss (premiums collected less claims paid.) On the company making an underwriting loss, Aggarwal said that the regulations were conservatively skewed in terms of providing for long-term claims upfront. The underwriting loss is therefore, only, a ‘technical loss’. “The profits are in the pocket, but they don’t show-up in the books,” he said. Aggarwal, a chartered accountant, observed that it was fine to be conservative in accounting.