The New India Assurance Company (NIACL) Q4 03/04 earnings summary

Executive summary

• FY04 gross premium rose 2.26% YoY to Rs 4,921.47 crore; net premium increased 3.37% to Rs 3,634.94 crore.

• Profit before tax more than doubled to Rs 647.89 crore and profit after tax rose to Rs 590.21 crore, with investment income and improved claims performance offsetting underwriting losses.

• The year’s results included Rs 716 crore of SVRS payments; Rs 191 crore was deferred, and the auditors flagged Rs 50.63 crore of profit overstatement related to amortised retirement-benefit costs.

Financial highlights

• Gross direct premium: Rs 4,921.47 crore, up 2.26% YoY; India Rs 4,045.68 crore, up 3.17%, and overseas Rs 875.79 crore, down 1.77%.

• Net premium increased 3.37% to Rs 3,634.94 crore; underwriting loss widened to Rs 678.31 crore from Rs 490.26 crore.

• PBT rose to Rs 647.89 crore from Rs 312.82 crore; PAT reached Rs 590.21 crore from Rs 255.81 crore.

• Investment income, including shareholder and policyholder allocations, was Rs 1,249.66 crore versus Rs 762.14 crore; reported growth was 47.45%.

• Dividend recommended at 45%, or Rs 4.50 per share, versus 40%, or Rs 4.00, in the prior year; EPS was Rs 59.02 versus Rs 25.58.

Outlook and guidance

• FY05 domestic gross premium target: Rs 4,550 crore; overseas targets: Rs 920 crore gross and Rs 834 crore net, with 5% accretion targeted.

• Plans included restructuring offices to improve operational viability, reduce management expenses and service customers, while expanding extension counters and corporate-agent distribution.

• Motor loss-control actions included reviewing high-claims offices, tightening cover-note controls and seeking enforcement of Motor Vehicles Act provisions.