Mumbai:
Bouncing back,the listed New India Assurance(NIA),the market leader in non-life business in the country, has reported a profit after tax(PAT) of Rs 483 crore for the third quarter ended Dec 19 as against a loss of Rs 113 crore in the same quarter of last year.
The company has seen its combined ratio improving from 127.14 per cent in Q3 FY 19 to 116.17 eper cent in Q3 FY 20. The incurred claims ratio(ICR) of the company improved from 101.49 per cent in Q3 FY 19 to 89.22 per cent in Q3 FY 20.
NIA has booked Rs 2210 crore of investment income in Q3 2019-20 while its nine month investment income is pegged at Rs 5390 crore.
With underwriting losses for the company falling to Rs 925 crore in Q3 Fy2019-20 from Rs1447 crore in Q3 Fy 2018-19,the company has improved its loss ratio both on (year on year)YoY basis and on a sequential basis. The ICR as at the end of current quarter stood at 91.55 per cent as against 96.07 per cent for the same period last year.
Though, during Q3 Fy 2019-20,NIA had seen a marginal rise in its gross premium to Rs 6,989 crore from Rs 6,780 crore recorded in Q3 Fy 2018-19, sequentially , the company has degrown its premium from Rs 8,249 crore booked in Q2 2019-20.
"The company has reported encouraging results for the quarter despite a challenging macro environment. While the reporting quarter did not witness any major Cat losses, the crop segment was adversely affected due to unseasonal rains across the country,'' said Atul Sahai, chairman cum managing director, NIA.
The company continues its focus on reducing the loss ratio and combined ratio and deliver better results going forward, said Sahai adding that in near terms the comoany is targetting a combined ratio of 108 per cent.
“Charting out a profitable growth of the company,we are shedding a lot of loss making business during the 3rd quarter of the current fiscal,'' said sources in the company adding that the company has drastically, 93 per cent, cut its loss making crop business from Rs 486 crore in Q3 2018-10 to Rs 32 crore in Q3 2019-20.
Sahai has pointed out that the NIA's existing loss ratios in motor(own damage), group health and small risk segment of property line of business have remained well above the comfort level. Going ahead retail health and miscelleneous of business need to much bigger part of the company's overall business, said Sahai adding that ministry of finance is keeping a close watch on the performance of the company.
Outlining three pronged strategies for increasing the company's return on equity, Sahai said NIA would improve underwriting profitability by reducing the incurred claim ratio,maintain/increase market share and leverage benefits of economies of scale driven by growth and leverage technology to drive customer satisfaction, profitability and growth.
As part of larger strategies to fucus on the bottomline growth, NIA, after two years,has stopped renewing loss making cashless Bhamashah Swasthya Bima Yojana,a health insurance scheme of the Rajasthan Government, contrubuting over Rs 1000 crore to the company's premium kitty.
The NIA scrip in both BSE and NSE has seen an upward trend in the last six months and has improved from-per share- Rs119 in Aug 2019 to end in Rs 150.35 on 7th Feb in BSE.
“With performance turn around of the company, its share value is likely to go up in the next few quarters, though it would take time to reach Rs 300 which is the basic price after the orginal investors who have paid Rs 600 per share at the time of IPO two years back,were offered bonus shares in the ratio of 1:1,'' said industry analysts.
With a market share of 14.57 per cent, the company continues to be the market leader in the non-life segment.
The foreign business of the company continued to be profitable during the quarter. The Solvency ratio of the company remains at a healthy 2.10x.
For the nine months ended Dec 19, the gross written premium of the company was at Rs 23,099 crs,up by 14.1per cent YoY and the profit after tax was at Rs 1291 crs against Rs 850 crs ,up by 52 per cent YoY.
The company has also provided Rs 846 crs for the additional liability arising out of "One more option of pension" given to the employees, out of which Rs 684 crs pertains to full provision on account of retired employees.This incremental provision was partly offset by higher investment income due to buoyant market conditions.Provisions towards certain debenture holdings further impacted the results by around Rs 50 crs.
Net Worth of the company including Fair value change of the company was at Rs 35246 crs while its investment assets at market value was at Rs.68435 crs in the first nine of the current fiscal year.