Neerja Kapur,CMD,New India Assurance

“The fall in  gross written premium is primarily due to the previous year recording significant revenues from the crop line of business and some government business, which was  not there this year. The company made a provision of about Rs 2,600 crore pertaining to additional liabilities on account of wage arrears and AS 15 additional liabilities during the quarter. Additional capital gains realised in favourable market conditions partially cushioned this adverse impact, said Neerja Kapur,CMD,NIA

Mumbai;

Despite improving some of its key ratios, state owned New India Assurance(NIA) has seen its net profit plunging by 74 per cent year on year (y-o-y) to Rs 33 crore in Q2FY2022-23 due to one time provision of about Rs 2600 crore to clear five-year wage arrears of its almost 14,000 employees.

The largest non-life Indian multinational, having presence in 26 countries, has recorded marginal fall in its gross premium to Rs 8,849 crore in the second quarter of FY 2022-23 from Rs 9,120 crore in the year ago period.

However, coming out of the Covid pandemic hit, in a positive sign, the insurer has improved many of its vital parameters like combined ratio, underwriting losses, incurred claim ratio and investment income, total and income and total expenses during the reporting quarter.

It has also further enhanced its solvency ratio sequentially during Q1 2022-23.

  “The fall in  gross written premium is primarily due to the previous year recording significant revenues from the crop line of business and some government business, which was  not there this year. The company made a provision of about Rs 2,600 crore pertaining to additional liabilities on account of five year wage arrears and AS 15 additional liabilities during the quarter. Additional capital gains realised in favourable market conditions partially cushioned this adverse impact, said Neerja Kapur who had taken over as the CMD of the company in September.

The company would like to maintain/Increase its market share and leverage benefits of economies of scale driven by growth, Kapur told analysts adding that the company is continuing to pursue its strategic path of continued growth with profitability which led to the company shedding some unprofitable business.

“Our emphasis is on improvement in bottom line & solvency ratio” said Kapur.

The company’s combined ratio has improved to 121.25 per cent in Q2FY2022-23 from 126.56 per cent in the year –ago period. The underwriting losses of the company has fallen by 23 per cent y-o-y to Rs 1507 crore in Q2FY 2022-23.

NIA’s incurred claim ratio has improved  to 99.78 per cent in Q2FY2022-23 from 108.19 per cent in the year ago period.

With a technical reserve of Rs 46,647 crore, the general insurer has almost doubled its investment income to Rs 3,022 crore during the reporting quarter.

The solvency ratio of the company has fallen to 1.77 in Q2 FY 2022-23 from 1.90 in the year ago period. The solvency ratio of the company was at 1.72 in the first quarter of FY 2022-23.

NIA has grown its portfolios like, health(the largest business contributing 47 per cent of company’s premium)), motor( contributing 23 per cent of premium), aviation,, marine while reducing its exposure for fire, liabilities, crop and engineering in the second quarter of FY 2022-23.

However, led by the health and motor, all the portfolios have suffered underwriting losses during the reporting quarter.

The company’s retention was at 80.18 per cent in Q2FY22-23 as against 80.32 per cent in the year ago period.

The company has sourced 35 per cent and 26 per cent  of its business from broking and agency channel respectively in the reporting quarter.

The company’s market share in the first seven months of the fiscal has fallen to 13.84 per cent from 15.52 per cent in the year ago period.