SBI General Insurance's gross written premium rose 45 percent YoY to Rs 6,840 crore in FY20.
At a time when the insurance sector is reeling under the impact of a coronavirus-led slowdown, private insurer SBI General’s FY20 net profit was up 23.4 percent on a year-on-year (YoY) basis at Rs 412 crore.
In an interaction with Moneycontrol, Pushan Mahapatra, MD and CEO, SBI General Insurance, said the company's diversified product portfolio has helped achieve a good financial performance for FY20.
"An insurer should not overdependent on any product, geography or channel. The motor insurance segment was already under pressure even prior to the COVID-19 era with sales dipping. However, we have been able to have a good mix across corporate, retail and small/medium enterprise (SME) segment," he said.
SBI General's gross written premium rose 45 percent YoY to Rs 6,840 crore in FY20. The underwriting profit was at Rs 61 crore in FY20 compared to Rs 79 crore in the year-ago period.
The general insurer is a joint venture between State Bank of India, Premji Invest and Warburg Pincus Group. Australia's IAG which was earlier a joint venture partner exited SBI General by selling its 26 percent to Premji Invest and Warburg Pincus Group in March 2020.
Among the product segments, SBI General has presence across motor, health, home, personal accident, commercial lines like fire and SME, and crop insurance.
Mahapatra said that the idea is to be present in segments that is viable on a long-term basis.
"Competition in the industry offers a certain pricing. If an insurer themselves lowers the pricing, the underwriting discipline gets impacted. One should not write business unless it makes sense from an underwriting perspective," he added.
In segments like fire insurance and group health, there was a practice of offering high discounts despite large claims in the previous years. However, now the pricing has seen an improvement after mandatory directions on premium rates by General Insurance Corporation of India which offers reinsurance cover to insurers for large risks.
Mahapatra said that in the fire segment, it is not just the pricing but also the level of coverage that has seen an improvement with increasing awareness among customers.
While Mahapatra admitted that retail lines have seen growth slowing down, he added that there should be an improvement post the first quarter subject to COVID-19 situation improving.
SBI General’s combined ratio of 98 percent in FY20 compared to 96.7 percent in the year-ago period. The non-life insurer’s solvency stood at 227 percent as against the regulatory requirement of 150 percent. In FY19, the solvency stood at 234 percent.
COVID-19 has led to a lockdown across the country. This has impacted the business of insurance company since field sales through agents and bank branches has seen an impact.
State Bank of India had also planned an initial public offering for SBI General. But Mahapatra said the IPO will have to wait.
"As a group (SBI), the idea is to pace out IPOs. We need to wait and see how the growth in the industry and in the overall economy pans out over next couple of quarters. There is no great urgency for capital right now," he said.
Under the SBI Group, its subsidiary SBI Card was listed on the stock exchanges on March 16, 2020. The SBU subsidiary raised Rs 10,340 crore through the public issue, of which the company received Rs 500 crore against fresh issue and the rest (Rs 9,840 crore) received by parent firm SBI and investor CA Rover Holdings, an affiliate of global investment firm Carlyle Group.