New India skips motor policies to post 104% net rise

New India Assurance Company, the country’s largest general insurance company, more than doubled its net profit to Rs 1,459.95 crore in 2006-07 from Rs 716.38 crore a year earlier by underwriting less of the loss-making motor insurance business and increasing business in profitable lines such as fire and engineering.

The public sector general insurer’s decision to do less of motor insurance business helped it reduce its net incurred claims ratio to 76.68 per cent for the year from last year’s 83.64 per cent.

However, this strategy resulted in a marginal growth in the company’s gross premium income. Its premium income grew by 4.71 per cent to Rs 5,017.20 crore for the year from Rs 4,791.49 crore a year earlier. The increase in the public sector general insurer’s premium income in 2005-06 was 14 per cent.

“We did selective underwriting for the year. The accretion percentage is less than the previous year due to strict underwriting of motor third-party insurance, a loss-making segment. The growth in motor portfolio was 3 per cent this year, compared with 15 per cent last year. However, the growth in other profitable lines was ensured. Fire business grew by 8 per cent compared with 6 per cent in FY06,” said A R Shekhar, general manager, New India Assurance.

New India has operations in 26 countries with direct operations in 23 countries and subsidiaries in West Indies, Nigeria and Sierra Leone. The gross premium income from overseas operations (excluding three subsidiaries) increased by 4.02 per cent to Rs 919.58 crore against Rs 884.05 crore a year earlier.

The gross direct global premium registered a growth of 4.60 per cent to Rs 5936.78 crore against Rs 5675.54 crore a year ago. The global net premium rose by 9.42 per cent to Rs 4751.76 crore for the year compared with Rs 4342.66 crore a year ago.

New India has set a target of Rs 5587 crore of gross direct premium in India and Rs 1013 crore from its foreign operations with a global target of Rs 6,600 crore, an accretion of 11.17 per cent.

Source: Business Standard