Last Updated : Feb 06, 2019 07:42 PM IST | Source:

New India Q3: Rise in crop losses, unforseen events push earnings into the red

The company faced heavy catastrophic and crop insurance losses in Q3

Moneycontrol News @moneycontrolcom
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State-owned general insurer New India Assurance posted a net loss of Rs 113.52 crore in the December quarter on account of a three-fold jump in underwriting losses. The insurer had posted profits of Rs 617.29 crore in the same quarter last fiscal.

Underwriting losses rose sharply to Rs 1,450.21 crore in Q3FY19 compared to Rs 464.30 crore in the year-ago period. Gross written premiums rose 6.2 percent to Rs 6,780.23 crore.

Due to the rise in underwriting losses, the combined ratio rose to 127.19 percent in Q3 from 109.13 percent a year ago. A ratio above 100 percent indicates the claims paid are higher than the premiums collected.

Atul Sahai, Chairman and Managing Director, New India Assurance said the third quarter had been a challenging one with multiple catastrophic events like Typhoon Trami, Hurricane Michael, California Wildfires, Kuwait floods and further adverse development in Hurricane Jebi and Hurricane Irma severely impacting the foreign operations in the UK, Japan, Bahrain, Aruba and Curacao.

The overall impact of these catastrophic events in Q3FY19 was about Rs 450 crore. On the domestic front, he said there was an impact of an adverse performance of the crop line of business where poor climatic conditions led to claim estimates being revised higher coupled with a refund of some premium due to area correction factor computation.

The company posted a crop insurance underwriting loss of Rs 160.59 crore in Q3FY19 compared to an underwriting profit of Rs 90.42 crore in Q3FY18.

New India said the investment income was impacted by about Rs 45 crore due to the write-off (as per accounting policy) of equity investments in an infrastructure company whose net worth eroded.

In the motor insurance business, the underwriting losses to Rs 593.92 crore in Q3 compared to Rs 203.36 crore loss in the year-ago period. However, Sahai explained that while the motor line of business continues to witness severe competition, the company is taking steps to meet the challenges head-on.

Sahai said the ensuing quarters (if unaffected by further unforeseen catastrophic events) should witness better results.

“While the year to date numbers have been below par the company continues its focus on reducing the loss ratio and combined ratio and deliver better results going forward,” he added.
First Published on Feb 6, 2019 07:42 pm
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