New India posts 354% rise in underwriting profit

The New India Assurance Company has posted over 354 per cent rise in underwriting profit of Rs 109 crore on a total premium income of Rs 4,921.47 crore for the financial year 2003-04.

This is as opposed to an underwriting loss of Rs 24 crore in the preceding fiscal (2002-03) when the state-owned insurance company mopped up a total premium of Rs 4,812.79 crore.

New India Assurance's business growth has been controlled as the company decided to "exercise underwriting prudence," said A V Purushothaman, director and general manager, New India Assurance.

On the back of higher underwriting profit and 64 per cent rise in investment income of Rs 1,250 crore, New India Assurance's net profit rise by 126.95 per cent to Rs 590 crore.

This is the highest among the four public sector general insurance company, with National Insurance Company posting a 46 per cent decline in its bottomline on the back of Rs 152 crore claim from Reliance Infocomm. Other state insurers have posted net profit in the region of Rs 130-170 crore.

New India Assurance has targeted a 12 per cent growth in premium to Rs 4,550 crore for financial year 2004-05. Its overseas operations are expected to grow by five per cent to Rs 920 crore.

While it topped the charts in terms of the highest premium income during the year, its growth was marginal at 3.1 per cent in terms of domestic business to Rs 4,045.68 crore in fiscal 2004, below the industry average.

This is partially on account of its prudence underwriting, whereby the net incurred claim ratio has fallen to 74.65 per cent against 77 per cent last year.

Meanwhile, New India Assurance has also introduced the concept of anywhere service for customers and other stakeholders through a web-enabled software developed with the help of CMC Ltd. The implementation has commenced in Mumbai, and will be extended to other regional offices by the end of the current year.

The rise in the company's bottomline is despite New India Assurance having taken a hit on account of payment made towards the voluntary retirement scheme (VRS).

It has decided to amortise the total amount of Rs 725 crore over a period of four years.

New India has also lost share of business on account of intense competition and price undercutting.

Nevertheless with the rise in net profit, New India Assurance increased the dividend to the government from 40 per cent last year to 45 per cent in 2003-04.