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According to data released by non-life companies in their public disclosures, three have generated underwriting profits — Bajaj Allianz General Insurance (Rs 293 crore), Universal Sompo (Rs 290 crore) and SBI General (Rs 94 crore). Bajaj Allianz is also the most profitable non-life company in the private sector with a net profit of Rs 921 crore — an increase of 26% over the net profit in the previous year.
Bajaj Allianz General Insurance MD & CEO Tapan Singhel said, “Last year, the industry had no major catastrophe. This has an impact of 5-6% on the overall margins. In the past, we have seen floods cause widespread losses on motor portfolio.” Another factor that has improved bottom lines, according to Singhel, was the listing of insurance companies, which has shifted focus to margins. The companies that listed in FY18 are New India Assurance, ICICI Lombard and national reinsurer GIC Re.
However, the non-life industry is extremely cyclical and improved margins often lead to more aggression for market share, which leads to pricing coming under pressure. “We have already seen prices coming under pressure during April renewals,” said Singhel.
The largest private non-life company ICICI Lombard General Insurance reported a profit of Rs 862 crore — an increase of 22% over previous year. The company has also narrowed its underwriting loss to Rs 231 crore from Rs 318 crore in FY17.
Public sector New India Assurance — the largest non-life company — reported a net profit of Rs 2,201 crore, despite underwriting losses of Rs 2,525 crore. This has been possible because the state-owned insurer has a very large investment portfolio arising out of reserves for claims that must be paid in future. It is the income from these reserves that help offset the claims.
The other three public sector insurance companies — National Insurance, Oriental Insurance and United India Insurance — have not yet declared their results. These three are scheduled to merge following the budget announcement.
Another company that has sharply improved its performance is HDFC Ergo General Insurance, which had earlier acquired L&T General Insurance. The company has reported a net profit of Rs 513 crore, which is 45% more than the previous year. Its underwriting losses have also shrunk to Rs 18 crore from Rs 88 crore.
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