New India Assurance posts Rs 748.27 cr in Q2 FY18, up 188 pc, declares an interim dividend of 75 pc

NIA's combined ratio dropped to 112.57% in the quarter as compared to 124.24% of the earlier year


Mumbai:

The New India Assurance (NIA) has recorded a profit after tax(PAT) of Rs 748.27 cr for Q2 FY18, an increase of 187.52 pc as compared to Rs 260.24 crores in the corresponding quarter of last year.



This was the first results announced by the company which completed its Rs 9,600 IPO and got listed on the stock exchanges earlier this week.




The company has declared an interim dividend of 75pc- Rs. 3.75 per equity share of face value of Rs 5 each. The dividend payout will cost Rs 300 crore for the company. 



The gross premium was written by the country's largest non-life insurer was Rs 6,489.15 crores for the reporting quarter with a growth of 12.18 pc as compared to Rs. 5,784.61 crores of earlier year.



The Return on Equity (annualised) of the company for the first half was 19.98 pc as compared to 8.52 pc of the same period previous year.



The increase in profitability was contributed to by significant improvement in the combined ratio which dropped to 112.57pc in the quarter as compared to 124.24 pc of the earlier year. The Adjusted Combined ratio- calculated after taking into account the investment income from technical reserves of Rs 29,000 crore- for the quarter dropped to 91.45 pc as compared to 103.65 pc of the earlier year largely driven by improvement in claims ratio and expenses of management ratio.Combined ratios measure the profitability of an insurance company by taking the sum of incurred losses and expenses and then dividing the total by the earned premium.

 



Incurred claim ratio (ICR) — which measures the total value of all claims paid by an insurance company divided by the premium collected in the same period — has come down to 87.45 per cent in the second quarter of FY18 against 95.88 per cent in the corresponding quarter of the previous year.



On a quarter-to-quarter basis, the underwriting loss, which was Rs 1,065 crore in Q2 FY2017, came down to Rs 626 crore in Q2 FY2018.




The insurer posted an operating profit of Rs 395.88 crore compared to a loss of Rs 260.24 crore a year ago.NIA saw investment income Rs 1,530 crore up from Rs 1,313 crore. It has investment portfolio of Rs 61,000 crore and had earned tiles of 8 pc on the portfolio. 



G Srinivasan, CMD, NIA, commented that the results of the company have improved substantially due to drop in claims ratio and operating expense ratio due to various steps taken by the company.  



``We have achieved better results were achieved by repricing health insurance products as well as claims control being done more efficiently, for instance by recruiting more doctors on their panel, he added.



There was a 25 per cent increase in retail health premiums while corporate health premiums were hiked between 20 and 40 pc, he said.Claims ratio in health had come down from 111 pc to 102 pc while motor claims ratio was down from nearly 88 pc to 83 pc.



Srinivasan said operating expenses were also down by 4 pc, mainly due to scaling up of business without any increase in costs. This helped in reduction of combined ratio at 111.76 pc, against 119.81 pc in the previous year period.



Srinivasan said he expects growth for the industry will be in the 18 to 20 pc range in the current fiscal.



NIA chief said that there are indications that the reinsurance rates in the Indian markets wouldn’t rise despite massive claims which may touch $100 billion out the recent US catastrophes.



``Overall reinsurance rates in the international market haven’t shown any signs of hardening and rates will go up only in the regions from where the claims have happened.’’ he said.







The Solvency margin as at 30th September 2017 was a very comfortable 2.24x as compared to 2.04x of earlier year.




For the half year ended 30th September 2017, the net profit  was Rs 1247.68 crores, an increase of 160.80 pc as compared to Rs.478.40 crores of the previous year.



The combined ratio stood at 111.76 pc as compared to 119.81 pc of the previous year. The adjusted combined ratio was 93.47 pc  for the current half year as compared to 102.08 pc  of the previous year same period.




The gross written premium for the half year was Rs.12,823.49 crores as against a figure of Rs 11,203.62 crores previous year registering a growth of 14.46 pc.




NIA would grow in line with the market and increase its market share marginally, as it has been doing for the past five years. The company has a share of 15 pc in the Rs 1.30 lakh crore general insurance market.



The general insurance Industry is poised for a great growth and New India as a market leader will play a very significant role in the growth of the market, said Srinivasan.


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