The New India Assurance Company (NIACL) Q4 06/07 earnings summary

Executive summary

• Gross direct premium reached ₹5,936.78 crore, up 4.60% YoY; net premium rose 9.42% to ₹4,751.76 crore as retention increased to 80.04%.

• PBT rose 88.64% to ₹1,613.93 crore and PAT rose 103.80% to ₹1,459.95 crore; the policyholder revenue-account result improved to ₹736.72 crore.

• Underwriting losses narrowed to ₹653.27 crore from ₹1,199.32 crore, while investment income and lower operating expenses supported the turnaround in reported earnings.

Financial highlights

• Gross direct premium in India was ₹5,017.20 crore, up 4.71%; outside India it was ₹919.58 crore, up 4.02%, against a 0.93% decline in FY06.

• Net incurred claims were ₹3,643.61 crore, up ₹11.60 crore YoY; the claims ratio improved to 76.68% from 83.64%.

• Operating expenses related to insurance fell to ₹1,153.89 crore from ₹1,312.03 crore; the ratio to net premium declined to 24.28% from 30.21%.

• Total investment income, net of provisions, rose to ₹2,251.35 crore from ₹2,010.79 crore; other income fell to ₹15.85 crore from ₹44.10 crore.

• Net premium earned increased to ₹4,535.11 crore from ₹4,121.00 crore; unexpired-risk reserve strain was ₹216.66 crore, versus ₹221.66 crore in FY06.

Outlook and guidance

• FY08 domestic gross direct premium target: ₹5,587 crore, implying targeted growth of 11.36%; focus areas include fire, engineering, project insurance and mediclaim.

• FY08 overseas premium objectives: ₹1,013 crore gross and ₹1,165 crore net, compared with FY07 completions of ₹919.58 crore and ₹981.44 crore, respectively.

• Planned growth actions include new auto tie-ups, expanded bancassurance and corporate agency channels, agent training and new miscellaneous products.

• Further tariff liberalization, including policy-wording freedom expected from 1 April 2008, was being addressed through underwriting changes and product innovation.