New India's combined ratio falls to a record 102.14% from 116.28%,Net profit at Rs 286.47 crore in Q1 FY 21 

The company has managed underwriting profits in marine, motor and health segments in first quarter of the current fiscal.  Commenting on the results, Atul Sahai,CMD,NIA said,"The company has reported encouraging results for the quarter despite a challenging macro environment due to COVID19, which has impacted the economy. There has been a significant improvement in the loss ratio, which apart from the loss minimization and corrective pricing actions undertaken, was also due to the reduced incidence of motor claims.''

Atul Sahai, CMD,New India Assurance

 

Mumbai:

With a record improvement in its combined ratio(CR) of 102.14 per cent,the New India Assurance(NIA), the country’s largest non-life multinational, has seen its net profit going up by 3 per cent year on year (y-o-Y) to Rs 286.47 crore in Q1 FY 21.

 The company’s CR shrank from 116.28 per cent in Q1 FY 20 to 102.14 per cent  in Q1 FY 21. The insurer has managed to reverse its underwriting losses majorly,that fell to Rs 403.7 crore in the reporting period, showing an y-o-y improvement of 63 per cent.The company has posted underwriting profits in marine, motor and health segments in the first quarter of the current fiscal. 

 The CR is the most important ratio for a non-life company as it provides a comprehensive measure of an insurer's profitability.A ratio below 100 percent indicates that the company is making an underwriting profit, while a ratio above 100 percent means that it is paying out more money in claims that it is receiving from premiums.

The NIA’s incurred claims ratio(ICR) has shown an improvement from 92.77 per cent in Q1 FY 20 to 66.28 per cent in Q1 FY 21.Incurred claim ratio is a ratio of the total value of claims paid or settled to the total premium collected in any given year.

The listed NIA, which  bucked the trend in the industry by consistently maintaining  a positive growth in its gross premiums, at Rs 8,368 crore, witnessed a y-o-y growth of 6.5 per cent in the reporting quarter.

The insurance premium has been unfavorably impacted due to reduced demand of passenger and commercial vehicles. However, due to restrictions and minimal movement of vehicles the claims experience in motor segment was lower. As the vehicle movement returns to normalcy the claims likely to increase in subsequent period, said the company.

Commenting on the results, Atul Sahai,CMD,said,"The company has reported encouraging results for the quarter despite a challenging macro environment due to COVID19, which has impacted the economy. There has been a significant improvement in the loss ratio, which apart from the loss minimization and corrective pricing actions undertaken, was also due to the reduced incidence of motor claims.''

The expenses have increased as the company has made an additional provision of Rs.538 Crores in anticipation of a one-time increase in the liabilities towards pension due to revision of annuity rates. Some large risk losses and Rs 150 Cr CAT losses on account of Nisarga and Amphan affected the performance of the property line of business during the quarter, he explained.

The NIA’s  income from investments plunged by 39 per cent y-0-y  to Rs 599.24 crore in the first quarter.

According to Sahay, investment income was on the lower side during the quarter due to reduced dividend payouts of many companies and payouts getting shifted to the second quarter.

``Equity markets recovering only towards the second half of the quarter also contributed to lower investment income. Foreign business continued to be profitable during the quarter,’’ added Sahay. 

The comoany's net worth including fair value change has increased from Rs 25,972 crores in March 2020 to 29,451 crores in June 2020 and its solvency margin remained healthy at 2.11x in the first quarter.
 


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