New India Assurance, the state-owned insurance major that got listed on stock exchanges two days ago, has posted a nearly three-fold jump in the profit during the second quarter ended September 30, 2017.
Net profit of the company for the July-September period stood at Rs 748.27 crore, higher than Rs 260.24 crore posted in the corresponding period of the previous financial year.
G Srinivasan, chairman and managing director of New India Assurance, said in a press conference the improvement in profitability was on account of drop in incurred claims loss and improvement in the operating expense ratio. "The incurred claims ratio has dropped to 87.45% during the quarter compared to 95.88% in same quarter last fiscal."
The company said in a release, "The increase in profitability was contributed to by significant improvement in the combined ratio, which dropped to 112.57% in the quarter as compared to 124.24% in the previous year. The adjusted combined ratio for the quarter dropped to 91.45% as compared to 103.65% a year ago, largely driven by improvement in claims ratio and expenses of management ratio."
During the quarter, the gross premium stood at Rs 6,489.15 crore with a growth of 12.18% as compared to Rs 5,784.61 crore in the corresponding period a year ago.
For the half year ended September 30, the net profit was Rs 1,247.68 crore as against Rs 478.40 crore a year ago.
The company had raised Rs 9,600 crore through initial public offering earlier this month and the stock had listed at Rs 750, a discount of Rs 50, on November 13, 2017. On Wednesday, the company's shares dropped further 2.87%, closing at Rs 681.75 on BSE.
New India's solvency ratio stood at 2.24% during the quarter as against 2.04% in the year-ago period.
The solvency ratio indicates minimum financial strength of an insurer and defines whether a company's cash flow is adequate to meet its short-term and long-term liabilities. In insurance parlance, solvency ratio means the size of its capital relative to the premiums written, and measures the risk an insurer faces of claims it cannot cover.
Insurance Regulatory and Development Authority of India (Irda) has fixed a requirement of solvency ratio of 1.5%.
The gross written premium for the half year was Rs 12,823.49 crore as against Rs 11,203.62 crore previous year, registering a growth of 14.46%.
The return on equity (annualised) for the first half was 19.98% as compared to 8.52% in the same period previous year.
The company has declared an interim dividend of 75%.
FINANCIAL HEALTH
- Gross premium registered a 12.18% growth at Rs 6,489 crore
- Combined ratio falls to 112.57% from 124.24% a year ago
- Solvency ratio was 2.24% as against 2.04% in the year-ago period
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The company said in a release, "The increase in profitability was contributed to by significant improvement in the combined ratio, which dropped to 112.57% in the quarter as compared to 124.24% in the previous year. The adjusted combined ratio for the quarter dropped to 91.45% as compared to 103.65% a year ago, largely driven by improvement in claims ratio and expenses of management ratio."
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