The New India Assurance(NIA), the market leader in non-life business in India, has seen its a net profit falling by to 54 per cent to Rs 850.31 crores in the first nine months of the FY 2018-19, as against a net profit of Rs 1864 crore in the year- ago period. .
With a market share of 14.71 per cent, the NIA has mobilised a global gross written premium of Rs.20,246 crores in Apr-Dec period of FY 2018-19..
The company’s combined ratio and the adjusted combined ratio is at 121.02 per cent and 103.46 per cent respectively in the reporting period.
However, with major losses from its domestic crop portfolio and international business, NIA had a net loss of Rs 113 crore crore in the third quarter ended in Dec 2018 as against a profit of Rs 617 crore in the corresponding quarter of the last fiscal.
The company’s underwriting losses have more than doubled to Rs 1,450 crore in the third quarter ended Q3 Fy 2018-19 as against Rs 464 crore of losses in the corresponding quarter of the last fiscal.
Due to the rise in underwriting losses, the combined ratio rose to 127.19 percent in Q3 from 109.13 percent a year ago. A ratio above 100 percent indicates the claims paid are higher than the premiums collected.
Gross written premiums of the company rose 6.2 percent to Rs 6,780.23 crore in Q3FY 2018-19.
NIA’s investment income at Rs 856 crore in the third quarter ended in Dec 2018,up by around 4 per cent, over Rs 826 crore, earned in the corresponding quarter of 2017-18.
Atul Sahai, chairman and managing director.said, “Q3FY19 has been challenging quarter for the company with multiple CAT events like Typhoon Trami, Hurricane Michael, California Wildfires, Kuwait floods and further adverse development in Hurricane Jebi and Hurricane Irma severely impacting the foreign operations in UK, Japan, Bahrain, Aruba and Curacao. The overall impact of these events in Q3FY19 was about Rs 450 Cr.
On the positive side, the company has taken steps taken to correct the pricing in health line of business is getting reflected in the improved results by this line of business, he said.
The ensuing quarters (if unaffected by further CAT events) should witness better results. While the year to date numbers have been below par the company continues its focus on reducing the loss ratio and combined ratio and deliver better results going forward, explained Sahai.
According to Sahai ,on the domestic front the company was impacted by adverse performance of the crop line of business where poor climatic conditions led to claim estimates being revised higher coupled with refund of some premium due to Area Correction factor computation. Underwriting losses from this line of business was Rs 161 cr for the quarter.
The company, during the quarter, aligned the method of computation of Unexpired risk reserve( URR) for foreign business with that of the Indian business which led to a further hit of about Rs 40 cr.URR is a prospective assessment of the amount that needs to be set aside in order to provide for claims and costs that will result out of unexpired future periods of cover.
Further,the investment income of the company was impacted by about Rs 45 crore due to the write off (as per accounting policy) of equity investments in the infrastructure company ILFS whose net worth was eroded.
NIA’s motor line of business continues to witness severe competition but the company is taking steps to meet the challenges head on.
The investments of the company continued to show accretion with the assets under management at Rs 68,640 crore.
The company’s solvency ratio was at 2.25 per cent as at Dec 2018.
The company has total direct exposure of debt of Rs 12,817.83 lakhs and equity shares of Rs 784.15 lakhs in lL&FS and its group companies, out of which non-convertible bond amounting to Rs 1,500.00 lakhs was due on December 05, 2018 and the same was defaulted by lL&FS.
As per the prudential norms issued by lRDAl and applicable to Investment by Insurance companies in India, the company has not classified the same as NPA, as the default period is less than 90 days as on December 31, 2018.