SBI General posts maiden profit, at Rs 153 crore in FY17

Private general insurance company SBI General Insurance has posted its maiden profit -- Rs 153 crore in the financial year ended March 31, 2017.

In an interaction with Moneycontrol, Pushan Mahapatra, MD and CEO, SBI General said that the insurer posted a profit of Rs 153 crore for FY17 as against loss of Rs 120 crore in FY16.

"Our topline rose to Rs 2,604 crore in FY17 as against Rs 2,040 crore in FY16. 2009 December. In terms of segments, crop showed a good growth as also the motor insurance book," he said.

Mahapatra explained that all segments contributed to the breakeven which had received the licence to operate in the insurance space in December 2009. Hence, they achieved breakeven in under eight years.

Talking about what contributed to the breakeven, he said better risk selection, efficient claims processing, better use of reinsurance capacities and expense control led to superior efficiency and productivity.

Mahapatra said that the company had consistently started making profits: sequentially, it posted profits in each quarter of FY17.

"This gives us the confidence that it is a sustainable and profitable growth. We expect that trend to continue," he added.

On the underwriting front too, the insurer is looking to wipe out losses in the next two years.

"We reduced our underwriting losses from Rs 375 crore in FY16  to Rs 197 crore in FY17. We would require another two years to wipe it out going at the current run rate," said Mahapatra.

SBI General's combined ratio stood at 113 percent in FY17 compared to 131 percent in FY16.

In segments like group health where pricing has been a challenge, Mahapatra said that they have been selective in this portfolio. A combined ratio below 100 percent indicates that an insurer is making underwriting profits, which means premium collected are more than claims paid.

SBI General plans to stay away from segments where pricing is unsustainable, Mahapatra said. For instance, SBI General has not yet entered the personal accident scheme (Pradhan Mantri Suraksha Bima Yojana) under Jan Suraksha Yojana.

"PMSBY, at its current pricing is not sustainable for us. State Bank of India, which is our corporate agent did ask us about this. They respected our decision since it was a commercial decision that we took. In future, if pricing improves, we will look into this space," he said.

Going forward, SBI General is looking to widen its reach among small and medium enterprises (SME) customers. This constitutes to 12 percent of their portfolio and the company is looking to expand its client base through its dedicated team for this purpose.

In the medium term, getting listed on the bourses is on their radar. While Mahapatra did not specify a timeline for an initial public offering (IPO), he explained that they would want to pay dividends for a couple of years, post underwriting profits and then hit the market.

"We are working towards that goal. We believe that an initial public offer should generate value for everyone."