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Most non-life insurance companies have taken a hit on their profitability in the first half of the current fiscal owing to the rising underwriting losses and huge amount of paid claims, despite booking higher premium during the period. In particular, it has taken a toll on the financial health of the public sector general insurers which are gearing up for the listing. Nevertheless, insurers say that things are improving. Due to huge underwriting losses, two of the state-owned non-life insurers, United India and Oriental, have suffered net losses of Rs. 429 crore and Rs. 382 crore, respectively in the first half of the fiscal.
Both were profitable companies in the year-ago period. While United India had posted a net profit of Rs. 356 crore, Oriental Insurance had registered a profit of Rs. 335 crore a year ago. United' solvency ratio, against a regulatory requirement of 150%, currently stands at 156% while the Oriental' solvency ratio has fallen to 114% during the reporting period. Another public sector general insurer National Insurance, though has booked a net profit of Rs. 128 crore, has continued to have a lower solvency ratio of 126% as on September 30.
Country' largest non-life insurer New India Assurance also took a hit on its profitability due tounderwriting losses in the first half of fiscal 2017. The insurer' profitability (PBT) has fallen to Rs. 514 crore in the reporting period from Rs. 921 crore a year ago due to a large underwriting loss of Rs. 1,803 crore in the reporting period. The company has logged a premium of Rs. 11,204 crore in H1 of the current fiscal.
"We had a few major fire claims which had contributed to drop in PBT," New India chairman and managing director G Srinivasan told PTI. "However things are improving now as we plan to bring down our combined ratio from 120% at present to 115% by the fiscal-end. We are also looking at making underwriting profit within 2-3 years' time," he said.
In spite of having booked underwriting loss at Rs. 250 crore in H1, country' largest private sector general insurer ICICI Lombard has recorded a net of profit (PAT) of Rs. 302 crore in the first half of the fiscal from Rs. 258 crore a year ago.
"Keeping in view the huge size of our book, it' difficult for us to predict by when we will be in a position to start making underwriting profit as the present trend may continue for some more time. Moreover, currently we are busy analysing the impact of Vardah cyclone before we arrive at projected figures," ICICI Lombard chief-underwriting, claims and reinsurance, Sanjay Datta said.
"Still we have done better on the front of PAT and other financial numbers," he said. However, Bajaj Allianz General Insurance is the only company which has recorded an underwriting profit of Rs. 29 crore and net profit of Rs. 366 crore in the reporting period from Rs. 288 crore a year ago.
"The growth in profits can be attributed to our prudent underwriting decisions and better expense management," Bajaj Allianz General Insurance managing director and chief executive Tapan Singhel said.
According to Singhel, the industry continues to reel under losses and the concerns around this seem to be getting even more louder in every conversation amongst the insurance companies and other stakeholders within the industry. If the industry continues to report losses in the future as well, it may stunt innovation and impact the claim settlement record of the insurer since the priority then will be to regain foothold.
