Mumbai:
Riding on a healthy investment income and lower underwriting losses, despite Covid-19 pandemic disruptions, state owned New India Assurance (NIA) announced a net profit of Rs 555.59 crore, up 5 per cent year-on-year (Y-o-Y) in Q2 FY 2020-21.
The net premiums for the country’s largest multinational grew 10 per cent y-o-y stood to Rs 6,543.42 crore in the reporting period.
NIA’s underwriting losses improved by 46 per cent y-o-y to Rs 543.04 crore in Q2 2020-21.
Investment income of the company in Q2 2020-21 was at Rs 931 crore as against Rs 1,137 crore in the corresponding period of the previous year.
Thanks to the lock down due to the Covid-19 pandemic, for the second consecutive quarter, NIA has booked underwriting profit of Rs873 crore in motor portfolio during the period. The company’s liability portfolio has been also profitable during the period.The company's other major portfolios like health, fire and crop have remained loss making.
Commenting on the results, Atul Sahai, chairman and managing Director said,"Considering the challenging macro environment, the company has delivered excellent results for the quarter and the half year ended 30th Sep 2020. Compared to the Industry the company has registered much better growth and has also increased its market share to 14.56 per cent as of Sep 30,2020. The growth has been accompanied by healthy operating metrics with combined ratio declining from 116.62 per cent in H1FY20 to 105.75 per cent in H1FY21.The adjusted combined ratio,(which accounts for Investment Income on Policyholders' Funds), is a better indicator of operating performance, improved from 99.34 per cent to 94.26 per cent during the same period. The profitability of the was accompanied with significant improvement in operating cash flows.''
The combined ratio has considerably improved primarily due to improved underwriting decisions and reduction in loss ratios.The improvement in the profitability is despite CAT losses of about Rs.150 Cr and provisions for doubtful receivables of about Rs 100 crore in Q1FY21 and investment provisions of about 117 Cr in Q2FY21, explained Sahay..
The incurred claims ratio has shown a considerable improvement from 92.81 per cent in H1FY 20 to 75.69 per cent in H1 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.
Solvency margin of NIA increased from 2.08x as of Sep 2019 to 2.14x as of Sep 2020.
NIA’s stock on Wednesday ended at Rs 104.65 up by 1.36% or Rs 1.40 on BSE.