Mumbai: Oriental Insurance Company has seen its net profit for 2007-08 shrink to Rs 50 crore, against over Rs 400 crore in the previous year, as it has been dealt a Rs 385-crore tax blow.
The company, which has had to pay the Rs 385 crore as long term capital gains tax from stock sales for two years, has now taken up the issue with the Central Board of Direct Taxes.
Taxed for first time
Mr M. Ramadoss, Oriental Insurance’s Chairman and Managing Director told Business Line, this was the first time that an insurance company was being taxed on profits made from long-term capital gains of stock sales. The Rs 385 crore tax levy has been made on a profit of Rs 560 crore from stock sales.
“The company’s net profit 2007-08 has come down to Rs 50 crore, against around Rs 400 crore in the previous year. We have taken up the issue with CBDT as well as the Revenue department,” Mr Ramadoss said.
In 2007-08 (the first year of the free-price regime), Oriental Insurance reported a gross written premium of Rs 3,855 crore, 1.86 per cent lower than the previous year’s Rs 3,928 crore.
“We have not been chasing topline growth because we were trying to protect our bottomline last year. For instance, we lost a corporate group mediclaim account worth Rs 70 crore because competing insurers quoted lower premium which was unviable from our perspective,” said Mr Ramadoss.
Service centres
The PSU insurance major, however, expects 8-10 per cent growth in gross written premium this year, driven by the big changes the company plans to make in terms of business process re-engineering.
These changes are based on the recommendations of its consultant, the Boston Consulting Group. The corporation plans to launch service centres for claim-settlement in cities which have more than 5 offices. So, to begin with, cities such as Delhi, Mumbai, Hyderabad, Patna and Jaipur will have service centres, which will process motor claims .
The objective is to move the back office work from the operating office as well as reducing the turnaround time for claim-processing.
Claims processing
“We found that our company took around 78 days to process 6,000 claims. We hope to reduce this turn around time to 15 days,” Mr Ramadoss said. The service centre, in course of time will also take care of other functions like policy issuance, third party claims and accounting.
The non-life insurer also hopes to improve its management of Third Party Administrators and increase its tie-ups with auto dealers. It will also have managers to monitor and help its 35,000 agency force.
New products
Mr Ramadoss said that Oriental Insurance would also launch new products in motor insurance and health insurance this year. Mr Ramadoss said the company planned to increase its presence in West Asia by setting up more representative offices. The company is currently present in Kuwait, Dubai and Nepal.
Source: The Hindu Business Line, Daily News & Analysis
Saturday, June 21, 2008
LIC EARMARKS $27B FOR BONDS
Mumbai: The Life Insurance Corp (LIC) aims to buy upto Rs 1.15 lakh crore ($27 billion) of bonds in this fiscal year nearly as much as the government’s annual borrowing, said.
Managing director, Mr Thomas Mathew, said in an interview that he expected stagnant profits from LIC’s equity investment because of weak stock markets and growing risk aversion among foreign funds, but would be more than compensated by earnings from bonds.
"Our total investment income would go up this year as we are buying more of debt, which is giving reasonably good returns now," he said on Wednesday. LIC plans to buy Rs 45,000 crore of stocks in 2008-09, compared with Rs 34,000 crore in 2007-08, and Rs 1.10 lakh crore to Rs 1.15 lakh crore of bonds, up 10 to 15 per cent, he said.
"Ten-year yields at around 8.3 per cent are good levels to enter and they are likely to remain around these levels for some time," Mr Mathew said. The 10-year benchmark yield rose 15 basis points last week after a key lending rate increase by the central bank and has gained nearly a percentage point since late January.
The 30-share BSE index has fallen about a quarter this year as foreign funds dumped shares worth $5.7 billion. In 2007, the benchmark had risen 47 per cent on the back of a record $17.4 billion foreign portfolio inflow.
Despite putting in more money in stocks this year, returns from equities are likely to remain around 97,000 billion rupees this year, similar to 2007-08, he said.
He expected the BSE index to reach 17,000-18,000 points by the end of March 2009, compared with 15,644 a year earlier. The benchmark closed down 2.2 percent on Thursday at 15,088.
Source: Reuters, Asian Age, Deccan Chronicle
Managing director, Mr Thomas Mathew, said in an interview that he expected stagnant profits from LIC’s equity investment because of weak stock markets and growing risk aversion among foreign funds, but would be more than compensated by earnings from bonds.
"Our total investment income would go up this year as we are buying more of debt, which is giving reasonably good returns now," he said on Wednesday. LIC plans to buy Rs 45,000 crore of stocks in 2008-09, compared with Rs 34,000 crore in 2007-08, and Rs 1.10 lakh crore to Rs 1.15 lakh crore of bonds, up 10 to 15 per cent, he said.
"Ten-year yields at around 8.3 per cent are good levels to enter and they are likely to remain around these levels for some time," Mr Mathew said. The 10-year benchmark yield rose 15 basis points last week after a key lending rate increase by the central bank and has gained nearly a percentage point since late January.
The 30-share BSE index has fallen about a quarter this year as foreign funds dumped shares worth $5.7 billion. In 2007, the benchmark had risen 47 per cent on the back of a record $17.4 billion foreign portfolio inflow.
Despite putting in more money in stocks this year, returns from equities are likely to remain around 97,000 billion rupees this year, similar to 2007-08, he said.
He expected the BSE index to reach 17,000-18,000 points by the end of March 2009, compared with 15,644 a year earlier. The benchmark closed down 2.2 percent on Thursday at 15,088.
Source: Reuters, Asian Age, Deccan Chronicle
INSURANCE FIRM CAN'T DENY THEFT CLAIM: CONSUMER PANEL
New Delhi: The Delhi Consumer Commission has said that insurance companies cannot deny theft claim to a consumer on the ground that no FIR was registered in connection with the incident.
"It is a misconceived notion that the insurance policy covering the risk of theft is not indemnifiable unless and until a person produces the copy of FIR," Commission president Justice JD Kapoor said, while dismissing an appeal of United India Insurance Company Ltd against a district forum's order directing it to pay Rs 30,000 as compensation to Delhi resident Subhash Chander Khanna.
The Commission also called for removing 'misconception' from the minds of the public regarding the necessity of registration of the FIR to claim reimbursements in theft cases.
"There is no difference between FIR and a simple complaint made by a person with the police detailing the facts of occurrence," the Commission said. As per the complaint, Khanna, whose wallet was stolen in a cinema hall at Jaipur in 2006, was denied reimbursement as the insurance company suspected that the theft was not committed and asked him to furnish the FIR to substantiate his claim. The complainant instead produced a stamped certificate from Jaipur police stating that the FIR, although registered, was not traceable, but the insurance company rejected it.
Finding no merit in the appeal of insurance firm, the State Commission said, "In view of the attitude of the company in not settling a simple dispute for more than two to three years forcing the insured to approach a consumer forum, the amount of compensation awarded is reasonable and does not call for interference."
Source: The Pioneer
"It is a misconceived notion that the insurance policy covering the risk of theft is not indemnifiable unless and until a person produces the copy of FIR," Commission president Justice JD Kapoor said, while dismissing an appeal of United India Insurance Company Ltd against a district forum's order directing it to pay Rs 30,000 as compensation to Delhi resident Subhash Chander Khanna.
The Commission also called for removing 'misconception' from the minds of the public regarding the necessity of registration of the FIR to claim reimbursements in theft cases.
"There is no difference between FIR and a simple complaint made by a person with the police detailing the facts of occurrence," the Commission said. As per the complaint, Khanna, whose wallet was stolen in a cinema hall at Jaipur in 2006, was denied reimbursement as the insurance company suspected that the theft was not committed and asked him to furnish the FIR to substantiate his claim. The complainant instead produced a stamped certificate from Jaipur police stating that the FIR, although registered, was not traceable, but the insurance company rejected it.
Finding no merit in the appeal of insurance firm, the State Commission said, "In view of the attitude of the company in not settling a simple dispute for more than two to three years forcing the insured to approach a consumer forum, the amount of compensation awarded is reasonable and does not call for interference."
Source: The Pioneer
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