New India Assurance turns profitable in Q4 FY 2019-20,records a net profit of Rs 113 crore
The largest general insurer in the country has improved its combined ratio(CR) from 130.13 per cent in Q4 FY 2019-20 to 116.21 per cent during the reporting period, The company’s underwriting losses,at Rs1,073 crore,has fallen by 42 per cent y-o-y in Q4 FY 2019-20.The incurred claim ratio(ICR) of the company has also improved to 90.97 in Q4 FY 2019-20 from 93.12 per cent in the year ago period. The NIA’s expense management ratio has fallen from 30.19 per cent in Q4 2019-20 to 22.19 per cent in Q4 2019-20.
With significant improvements in all of its vital parameters,the listed New India Assurance(NIA) has recorded a net profit of Rs113 crore in the March quarter as against a loss of Rs 268 crore in the year-ago period.
The company which finalised its results on Tuesday,didn’t declare in dividend as the insurance regulator had earlier asked the insurers to refrain from offering dividends in 2019-20 to conserve capital to deal with Covid-19 pandemic situation in the country.
The global premium of the general insurance multinational ,at Rs 8,193, has risen by five per cent year- on –year-year (Y-O-Y) in Q4 FY 2019-20 while its net premium,at Rs 6,315,has increased by four per cent y-o-y in the same period.
The largest general insurer in the country has improved its combined ratio(CR) from 130.13 per cent in Q4 FY 2019-20 to 116.21 per cent during the reporting period.
``We intend to bring the CR down by another 5-7 per cent during the current fiscal,'' said Atul Sahay,CMD, New India Assurance.
The company’s underwriting losses,at Rs1,073 crore,has fallen significantly by 42 per cent y-o-y in Q4 FY 2019-20.The incurred claim ratio(ICR) of the company has also improved to 90.97 in Q4 FY 2019-20 from 93.12 per cent in the year ago period.
The NIA’s expense management ratio has fallen from 30.19 per cent in Q4 2019-20 to 22.19 per cent in Q4 2019-20.
``Actual management expenses are much lesser but because of extraordinary provisions for new pension optees and increase in cost of annuity it’s not reflecting in numbers. In the current quarter you will see much more improved performance despite these torrid times,'' said Sahay
The company has seen its total income has grown by seven per cent y-o-y to Rs 7,068 crore in March quarter while its expenses has fallen by four per cent y-o-y to Rs 7,221 crore in the same quarter.
The company’s net retention is at the 77.09 per cent in Q4 FY 2019-20 as against 77.45 per cent in the year ago period.
``Global gross written premium grew by 12 per cent, clocking an all time high of Rs.31,244 Crs. The company's net profit, at Rs. 1659 cr,was up by 2.5 times, compared to last year.Solvency ratio remained at a healthy 2.11x,'' said Sahay
With Covid-19 pandemic posing many challenges to the insurance sector, the company has remained conervative in its expecations in 2020-20 Providing future outlook,the company has said in 2020-21 motor insurance business, the largest portfolio of the company,is showing negative growth as not many new vehicles are being sold.
Delay in commencement of new projects can have impact on the property line of business. The overall sluggish economic growth can affect other lines of businesses though they are not major ones.
The overall premium growth in FY21 may hence be under pressure, said the company.
However, Covid-19 has increased awareness on the need for a health cover. The proactive steps of the government and the regulator in introducing health / COVID-19 related products are expected to result in growth in health insurance business.
Equity market was adversely affected due to outbreak of COVID-19 in India in March 2020.The impact of the same is already reflected in the company's balance sheet as decrease in fair value change account.
However, the market has started showing signs of revival now. In the opinion of the company, there is no need for any provision for the decline in equity as on 31st March 2020.
The company has further said its investment income in FY 2020 - 21, may decline due to RBI reducing the interest rates and companies reducing dividend payouts to conserve their resources.
In foreign operations, motor and property business have been impacted during the last quarter of FY2019-20.
Due to relaxation of lockdown in some areas, few territories are expected to resume to normalcy in the second quarter of 2020-21 but others may take some more time to get back to normal. Receivable in these territories may get delayed due to continued lockdown; however the management does not foresee any difficulty in recovering these amounts at this stage.Fall in interest rates on fxed deposits in banks, may impact the Investment income in foreign territories, said the company