Mumbai:
Despite higher underwriting losses and iower investment income, State owned New India Assurance (NIA) Friday posted a 5.9 per cent year on year (Y-o-Y) rise in its net profit to Rs 521 crore for the third quarter ended December 2020. It had registered a net profit of Rs 483 crore in the same quarter a year ago.
“It is heartening to note that the company has grown faster than the industry, increased its market share. improved its operating performance and was able to offset many adverse impacts to deliver a healthy growth in profits during the quarter, said Atul Sahay, CMD, NIA.
The improvement in profit before tax during the period is despite CAT losses of about Rs.150 crore, he said.
Amidst disruptions due to the Covid-19 pandemic and after exiting some of the loss making portfolios, that were almost contributing a premium of Rs 1500 crore, the largest general insurer in the country has managed to grow its gross premium income by 12 per cent y-o-y during the reported quarter to Rs 7,831 .38 crore as against Rs 6989 crore in the year ago period.
The company has grown its marine, motor, health and aviation business during the reporting quarter while reducing its exposure in fire,liability, engineering and crop portfolios.
The company's combined ratio has slightly deteriorated to 116.82 per cent in the reporting quarter from 115..88 per cent in the year-ago period and underwriting losses widened to Rs 1,025.59 crore from Rs 916.08 crore during the period.Underwriting losses reflect that premium collected by an insurer were lower than expenses incurred and claims paid out.
However, it has seen its combined ratio improving from 116.37 percent in nine month of FY20 to 109.62 percent in 9M FY21.
"The company has increased its market share to 14.64 per cent as of 31st Dec 2020 as compared to 14.57 per cent for the same period last year. The growth has been accompanied by healthy operating metrics with combined ratio declining from 116.37 per cent in 9MFY20 to 109.62 per cent in 9MFY21. The adjusted combined ratio, (which accounts for Investment Income on Policyholders' Funds), is a better indicator of operating performance, improved from 96.59 per cent to 95.43 per cent and remains comfortably below 100 per cent,'' explained Sahai.
Except portfolios including liabilities, engineering, aviation and fire, rest of the lines of business have caused underwriting losses for the company during the quater..Also except health (including personal accident) all the portfolios of the company have contributed to company's overall operating profit.
NIA's investment income has fallen by 19 per cent y-o-y to 1798 crore in Q3FY 21.
The investment income for the period was lower than the same period last year due to the poor market conditions in the initial part of the financial year,'said Sahay..
Solvency Margin of the company has increased from 2.10x as of Dec 2019 to 2.15x as of Dec 2020.
NIA reported a 4.3 percent increase in total income at Rs 7,982.74 crore in Q3 of 2020-21 as against Rs 7,652.59 crore in the same period of 2019-20. The company said it made provisions for doubtful debts (including bad debts written off) to the tune of Rs 142.44 crore for Q3 FY21, up from Rs 36.12 crore provision in the year-ago quarter.
However, with a lot of austerity measures, at the time of Covid-19 pandemic, total expenses of the company came down to Rs 180.82 crore in the quarter from Rs 712.80 crore.
The net worth including fair value of the company has increased from Rs 25,972 crore as on 31' March 2020 to Rs 34,851 crore as of 31st Dec 2020.
There has been provisions for doubtful receivables of about Rs 125 crore and investment provisions of about Rs 320 crore. The employee cost is significantly higher due to provisions towards employee retirement benefits. Effective tax rate was also higher as some of the provisions were disallowed for income tax purposes, added Sahay.
Stock of the company closed 3.43 percent up at Rs 137.15 apiece on BSE.