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Public sector general insurer United India Insurance Company (UIIC) has reported a profit after tax of ₹1,003 crore for the year 2017-18, compared with a loss of ₹1,914 crore in the previous fiscal, thanks to significantly lower underwriting losses.
In 2017-18, the underwriting losses fell by almost half to ₹2,542 crore from ₹4,444 crore in 2016-17.
In FY17, the company had to make a huge technical provision at one go, and hence, the underwriting losses were huge, which led to the company reporting a net loss of ₹1,914 crore. In 2017-18, net incurred claims were lower at ₹12,138 crore (₹12,881 crore in FY17), while expenses dropped to ₹2,598 crore (₹2,969 crore). Combined ratio (a measure of insurer profitability) of UIIC stood at 119.77 per cent against 136.94 per cent in 2016-17. Its investment income zoomed to ₹3,770 crore from ₹2,532 crore.
The second-largest general insurer in the country managed to take the solvency ratio to 1.54 per cent (1.5 per cent is stipulated by the regulator) during FY18 against 1.15 per cent as of March 31, 2017.
“This was achieved by measures such as underwriting control, focus on better-priced products and raise of subordinated debt of about ₹900 crore,” said MN Sarma, Chairman-cum-Managing Director, UIIC.
Its gross premium income grew by 9 per cent at ₹17,430 crore (₹16,063 crore), while net premium income stood at ₹12, 861, up from ₹12,032 crore.
Health business
Sarma admitted that company’s gross premium income growth was lower than the industry average of about 15 per cent. This was due to the decision to move away from certain group health business where pricing was under severe pressure and that posed a threat to profitability.
The company had to give up about ₹800 crore worth of group health business due to inadequate pricing. But he asserted that health would continue to drive the growth of the company along with motor and crop segments, going forward.
In the health segment, the company is planning to come out with a few products which will have sum assured levels of ₹25 lakh, ₹50 lakh and also ₹1 crore with several features, this fiscal.
During the current fiscal, UIIC is targeting gross premium income growth of 10-12 per cent.
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