Royal Sundaram Q1 total premium income up 20%

Private general insurance company Royal Sundaram total premium income for the first quarter this fiscal grew 20 per cent to Rs 86 crore.

Speaking to Business Standard, Royal Sundaram managing director Antony Jacob said that during the quarter nearly 1.3 lakh new policies were added.

According to him the trend would change from the second quarter and more initiatives would be taken by the company to improve its customer base.

"The thrust from the second quarter would be on the retail segment and we expect to increase business in private motor, health, personal accidents and small and medium business sectors," he said.

The company for the financial year 2004-05 expects premium income to grow by around 30 per cent and cross the Rs 370-crore mark.

The premium income for the financial year ended March 31, 2004 was Rs 262 crore, a 40 per cent increase over the previous year's premium of Rs 187 crore. The company posted a first time ever profit after tax of Rs 8 crore for the financial year 2003-04.

Motor insurance contributed about 50 per cent of the company's total premium income followed by fire insurance at 21 per cent and personal accident at eight per cent.

"The company has identified insurance packages for small enterprises and health insurance for individuals as the segments to focus on. During the previous financial year small enterprises generated a premium income of Rs 18 crore and we expect to double the amount during the current fiscal," he said.

While welcoming the proposed increase in the foreign direct investment in the insurance sector, Jacob said, "The original agreement provides for the increase in stake by Royal & Sun Alliance Plc, the other partner in the company, which has at present a 26 per cent stake and we would be discussing the issue when the legislation is passed."

Speaking about the outlook for the current financial year, he said that the company would be focussing on consolidating in regions that they were present in and not go in for branch expansion.

"We have 30 branches across the country and we would be adding two more branches," Jacob said.

The company plans to increase the number of employees to around 500 by the end of the year from the present 400. "At present, we have around five lakh policy holders and by the end of the year we expect to increase in to around seven lakh," he said.

The company's claims ratio (extent of premium paid out as claims) for 2003-04 was 68 per cent, a drop from the previous year's ratio of 76 per cent. Jacob attributed the fall in claims ratio to the improvement in the company's processes.

"We expect it to bring it below the 65 per cent mark in the next three years with better use of IT which has led to faster decision making. The growth in business had also led to a fall in the ratio,"Jacob said.

"We have spent around Rs 10-12 crore on the IT initiatives and would be investing around Rs 4 crore this year to add more branches to RTGS (Real Time Gross Settlement)," Jacob said.

Royal Sundaram has three offices in the state -- Hyderabad, Vijayawada and Vishakapatnam. "We would be increasing the head count in the state to 30 in the next 12 months from the current 18," Jacob said.