The New India Assurance Company (NIACL) Q4 05/06 earnings summary

Executive summary

• FY 2005-06 gross premium rose 11.22% to Rs.5,675.54 crore; domestic direct premium growth accelerated to 13.79%, while overseas direct premium declined 0.93%.

• Profit before tax increased 7.23% to Rs.855.57 crore and profit after tax rose 78.10% to Rs.716.38 crore; investment gains supported results despite a larger underwriting deficit.

• The policyholders’ account ended with a Rs.36.03 crore surplus, down from Rs.232.78 crore; net incurred claims ratio rose to 83.64% from 74.58%.

Financial highlights

• Gross direct premium in India was Rs.4,791.49 crore, up 13.79%; total gross premium, including accepted reinsurance, was Rs.5,675.54 crore, up 11.22%.

• Net premium increased 11.49% to Rs.4,342.66 crore; net premium earned was Rs.4,121.00 crore versus Rs.3,767.17 crore.

• Investment income, net of provisions, was Rs.2,010.79 crore versus Rs.1,450.73 crore; profit on investment sales was Rs.1,138.43 crore versus Rs.641 crore.

• PBT was Rs.855.57 crore versus Rs.797.88 crore; PAT was Rs.716.38 crore versus Rs.402.23 crore.

• Total assets rose to Rs.27,025.58 crore from Rs.19,827.19 crore, with the fair value change account increasing to Rs.12,211.27 crore from Rs.6,846.97 crore.

Outlook and guidance

• FY 2006-07 domestic gross direct premium target: Rs.5,271 crore, with 10% growth; planning assumed detariffing from 1 January 2007 and possible premium reductions late in the year.

• FY 2006-07 overseas premium objectives: Rs.1,256.73 crore gross and Rs.1,021.50 crore net, compared with FY 2005-06 results of Rs.1,122.35 crore and Rs.877.08 crore.

• Priorities included profitable Fire and Engineering business, tighter Motor and Health portfolio management, and growth through bancassurance, corporate agencies, auto tie-ups and agent recruitment.