G Srinivasan, CMD, New India Assurance
State-owned general insurer New India Assurance Company posted a 187 per cent rise in net profit at Rs 748.27 crore in the quarter ended September (Q2FY18) due to drop in claims and control over expenses.
It had posted a net profit of Rs 260.24 crore in July-September 2016 (Q2FY17). The company’s board announced an interim dividend of around Rs 300 crore.
Gross written premium rose 12.18 per cent to Rs 6,489.15 crore in Q2FY18 against Rs 5,784.61 crore in Q2FY17.
“The increase in profitability is largely due to a drop in the incurred claims ratio (ICR) and also improvement in the operating expenses ratio (OER),” said G Srinivasan, chairman and managing director of New India Assurance, on Wednesday afternoon.
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.
Operating expense ratio came down to 16.59 per cent at the end of September 2017 against 20.73 per cent at the end of September 2017. Srinivasan said the “operating expenses ratio has also come down by about four per cent, largely because of the scale-up of operations.”
Combined ratio stood at 112.57 per cent in Q2 FY18, down from 124.25 per cent in Q2 FY17; while adjusted combined ratio stood at 91.45 per cent in Q2 FY18 against 103.65 per cent in Q2 FY 17.
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. In contrast, the adjusted combined ratio takes into account the investment income earned on the policyholders’ reserves. Insurance companies
have technical reserves, which account for outstanding claims and reserves for unexpected risk for which a technical reserve is maintained. The adjusted combined ratio for New India Assurance was around 93 per cent.