State-run New Indian Assurance (NIA) after doubling its net profit to Rs 2,201 crore in 2017-18, has declared a 1: 1 bonus and a dividend of 100 per cent per share on Friday..
The gross written premium of the company, the largest non-life general insurer that got listed recently, stood at Rs 26,554 crore, up 15.3 per cent over Rs 23,020 crore in 2016-17.
The company’s combined ratio improved to 111.2 per cent in 2017-18 compared to 118.7 per cent in FY 2016-17.
The company’s, underwriting losses have dipped by 29 per cent to Rs 2525 crore in 2017-18 from Rs 3547 crore in 2016-17.
With an average yield of 8 per ent on it investment,the NIA's investment income has gone up by 14.5 per cent to Rs 5165 crore in 2017-18 from Rs 4509 crre in 2016-17.The company has an operating profit of Rs 1007 crore in the reporting period as against a loss Rs 567 crore in 2016-17.
Outlining three reasons on the purpose of announcing 1:1 bonus soon after listing, G Srinivasan, CMD, NIA, said the move will increase the liquidity of the company’s stock, award share holders, and signal market on earning capability,
“The combined ratio has dropped by 8 per cent due to improvement in the claims ratio and expense ratio of the company. This has been the result of various steps taken to improve underwriting and claims management of the company. The ROE has been healthy at 16.1 per cent,’’ said Srinivasan.
The company will continue to take various steps to further improve the operating performance in the coming years as well, he added..
The company has declared a final dividend of Rs 5 per share which is in addition to Rs 3.75 per share declared as interim dividend taking the overall for the year to Rs 8.75 per share.
NIA’s expense ratio of the improved to 16.84 per cent from 20.3 per cent during year The solvency ratio of the company has increased to 2.58 in 2017-18 from 2.17 in 2016-17.
The company continued to grow its business in India by about 19 per cent largely due to its brand image and satisfied customers in the market. The Indian general insurance industry is poised for a great expansion in the coming years and NIA as the market leader would leverage this for continued better performance.
In the health segment the NIA’s loss ratio has fallen to 103 per cent in 2017-18 from 115 per cent in 2016-17. Similarly,in motor the loss ratio of the company is at 79 per cent (in own damage segment 80 per cent) in 2017-18 as against 85 per cent in 2016-17.
NIA’s market share in the crop segment in the industry is currently at 6-7 per cent. Loss ratio for the company in the segment was at 92 per cent in 2017-18 (75 per cent in 2016-17). It was due to losses incurred due to Kharif and to some extent Rabi earlier too. A large amount of business under the segment goes to the reinsurers.
NIA has done business of Rs1650 crore under crop insurance in 2017-18 over Rs1200 crore in a year ago period. GIC Re is the largest reinsurer on the space.
Renewal on April 1
Group health prices have gone up, whereas property prices had remained flat during the year. Motor third party premium grew by 7-8 per cent as IRDAI increased the prices under the segment.
Majority of reinsurance deals were transacted with GIC Re. It is too early days for the foreign reinsurers who have set up their operations in the India. We grew our portfolio little more than the industry growth.
National Health Protection Scheme (NHPS)
We are upbeat about it. At the same time, we also want to get a right price. It’s meant for BPL only. I don’t think it will cannibalise our existing health insurance portfolio.
NIA retention ration is almost 82 per cent and the balance goes for reinsurance. Foreign reinsurers are still in their early days as GIC Re continues to be the strong player on the space.
Merger of three PSU general insurance companies
It is very good for the market. It will bring down competition intensity. In terms of business size, the merged entity will continue to be a bigger than New India. However, in terms of financial strength, New India will continue to be the bigger one.
GIFT City biz
We have done a business of Rs 40 crore in 2017-18.
There have been number of enquiries from banks after frauds involving Punjab National Bank came to the limelight.The only thing is that the banks covers with very small sizes for their employees. If they take bigger risk, we can provide covers to them with reinsurance support.
We are doing well on this front too. More and more organizations are opting for cyber covers. There have been no claims in this portfolio.
NIA’s Myanmar licence will happen shortly. We also hope to get a licence for operations in Dubai Financial Centre too, that can do both insurance and reinsurance business in Middl East and African region.
We have also decided to recruit 700 assistants in 2018-19