The New India Assurance Company (NIACL) Q4 01/02 earnings summary

Executive summary

• FY 2001-02 gross direct premium reached Rs 4,198.06 crore, up 20.18% YoY; net premium rose 14.85% to Rs 3,068.23 crore.

• Profit after tax was Rs 142 crore versus Rs 173.54 crore; continued underwriting losses, additional actuarial reserves and accounting-policy changes weighed on reported results.

• Operating priorities for FY 2002-03 shifted toward earnings quality, customer retention, health insurance, distribution expansion and operating efficiency.

Financial highlights

• Profit before tax was Rs 208.20 crore versus Rs 238.84 crore; profit after tax was Rs 142 crore versus Rs 173.54 crore.

• Net underwriting loss widened to Rs 529.60 crore from Rs 446.04 crore; net investment income apportioned to policyholders and shareholders totaled Rs 752 crore.

• Gross direct premium: India Rs 3,512.33 crore, up 15.49%; overseas Rs 685.73 crore, up 51.75%.

• Additional unexpired-risk reserve provision was Rs 209.36 crore versus Rs 95.02 crore; reserve balance reached Rs 1,639.16 crore at 31 March 2002.

• Total assets increased Rs 3,716.08 crore; Rs 2,730.46 crore reflected the Fair Value Change Account and Rs 985.62 crore real asset growth.

Outlook and guidance

• FY 2002-03 domestic gross premium target: Rs 3,800 crore, with targeted growth of 8.2%.

• Overseas FY 2002-03 targets: Rs 755 crore gross premium and Rs 631 crore net premium, with targeted accretion of 5.5%.

• Priorities include profitable customer retention, focused products, health-insurance systems, alternative distribution, corporate and bank agency arrangements, and office consolidation to reduce costs.

• Management expected Indian economic growth near 6% for FY 2002-03, while noting deficient monsoon risk; A.M. Best expected tariff increases to support performance, assuming normal loss experience.