National Insurance posts net profit of Rs 71.2
September 1, 2004

National Insurance (NIC) posted a net profit of Rs 71.2 crore for the financial year ended March 31 ‘04. This represented a 47 per cent decline from the Rs 135 crore that it had reaped in ‘02-03.

HS Wadhwa, chairman and managing director, NIC said, “The company increased its premium base to Rs 3,400 crore in ‘03-04. The growth rate of premium has been positive for fire and miscellaneous business. Our tie-ups with public sector banks have given the required boost to the personal line of business.”

The nationalised insurance major, however, reported the highest premium accretion and growth in general insurance industry during ‘03-04, at Rs 527 crore and 18 per cent respectively.

Meanwhile National Insurance reported a net profit after taxes of Rs 71 crore for 2003-04, citing expenses on the voluntary retirement scheme (VRS) and other provisions to defend the steep fall from the previous year’s figure of Rs 135 crore. The Kolkata-based general insurance major said it incurred an expenditure of nearly Rs 58 crore for a voluntary retirement scheme.

The company which suffered a net loss of Rs 95 crore two years back in ‘01-02, has staged a turnaround and become the fastest growing general insurance company in the last one year, according to industry estimates. The average growth of the other three PSU insurers has been at three per cent.

Wadhwa said, “In the current year, we expect the premium to grow to Rs 4,360 crore. Over the next two years, the bancassurance premium is expected to be around Rs 1,000 crore. Our tie-ups with Maruti and more recently Hero Honda are expected to fetch around Rs 800 crore.” NIC has approached the General Insurance Corporation (GIC) to provide it with “substantial financial relief” on its Reliance Infocomm account, where it suffered a loss of Rs 152 crore.

NIC has also provided an outstanding liability for Rs 2,093 crore in ‘03-04 against an amount of Rs 1,907 crore in ‘02-03. According to the chairman, the company’s cost control measures have resulted in a decrease in its management expense ratio to 19.8 per cent from 21 per cent the previous year.

This is, however, excluding the payment on account of SVRS. “Given the projected growth of 25 per cent in the current year, the management expenses ratio is expected to come down below 18 per cent this year,” he said.

ref. www.asiainsurancepost.com