The New India Assurance Company (NIACL) Q4 08/09 earnings summary

Executive summary

• FY09 gross premium rose 4.95% YoY to ₹6,455.78 crore; net premium grew 11.93% to ₹5,500.31 crore, while PAT fell to ₹224.14 crore from ₹1,401.15 crore.

• Profit fell amid a larger underwriting deficit, higher operating costs and lower investment gains from sales; overseas operations returned to underwriting profit.

Financial highlights

• PBT was ₹297.22 crore vs ₹1,521.48 crore; PAT was ₹224.14 crore vs ₹1,401.15 crore, and EPS was ₹11.21 vs ₹70.06.

• Global gross direct premium reached ₹6,455.78 crore, up 4.95%; global net premium was ₹5,500.31 crore, up 11.93%.

• Investment income fell to ₹1,686.82 crore from ₹2,344.62 crore; investment-sale profit declined to ₹456 crore from ₹1,192 crore amid weak markets and a decision to avoid selling at low prices.

• Operating expenses rose ₹437.35 crore to ₹1,456.45 crore, including ₹274 crore of higher pension, gratuity and leave-encashment provisions and salary-arrears provision.

• Proposed dividend was ₹45 crore, down from ₹283 crore; free reserves rose to ₹6,898.72 crore from ₹6,772.80 crore.

Outlook and guidance

• FY10 domestic gross direct premium target: ₹6,100 crore, implying targeted growth of 10.73%; foreign targets were ₹1,441.35 crore gross and ₹1,264.72 crore net.

• Health and retail were identified as growth opportunities, supported by market demand, revised rates, customized products and focused bancassurance, broker and auto-tie-up channels.

• Reduced pricing in detariffed Fire, Engineering and Motor own-damage lines was expected to constrain premium growth despite broader industrial growth.