United India rise in profits from investments

United India Insurance Co (UIIC) expects to earn an income of around Rs 1,300-1,400 crore from its investment portfolio at the end of FY07. UIIC's total investment was around Rs 7,000 crore as on January 31, of which around Rs 1,500 crore was put in equities.

The company expects to garner premium income of around Rs 3,500 crore by the end of the current financial year, compared with around Rs 3,154.78 crore collected last year. Major drivers for around 13 per cent growth seen this year are fire and miscellaneous insurance policies.

The fire segment is expected to contribute around 20 per cent of the premium income, with motor and marine segments contributing around 35 and 5 per cent, respectively.

The miscellaneous category, which includes health, would bring up the rest, said M K Garg, chairman and managing director, UIIC.

He also said the company would incur underwriting losses overall with the exceptions of its fire and engineering insurance segments.

On the company's reinsurance outgo, Garg said around 73 per cent of the premium would be retained by UIIC, while the rest would be reinsured.

"We have been able to settle large claims like the recent Oil and Natural Gas Corporation (ONGC)," he added.

Last week, UIIC had settled the largest claim in Indian insurance history when it paid ONGC about Rs 1,700 crore in damages for the devastation caused by a fire at the Bombay High North (BHN) oil rig in 2005.

Spiralling healthcare costs have led to UIIC seeking to hike its premium rates by 15-20 per cent.

"Healthcare costs have become dearer over the years. Besides, awareness among the public about mediclaim and health insurance policies has increased considerably. We are still making losses in the health segment," Garg said.

The company has filed three medical products with the Insurance Regulatory and Development Authority (IRDA) and is awaiting approval.

UIIC also plans to extend its relationship with Coris America, a subsidiary of France-based Coris, for the handling of overseas medical policies online. UIIC's fee to Coris would account for less than 2 per cent of the policy premium income, according to Garg.

Talking about the increasing competition among insurance players, Garg said, "In the mad rush for volumes, we cannot ignore the company's bottomline. There is a need for consistency of operations but at the same time, we do need to be proactive to tap the market's potential. As far as the pricing of UIIC is concerned, it is on a level playing field in comparison to the other players."