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United India posts Rs. 300 cr. net profit

Special Correspondent

Decline in share of motor insurance in net premium



M. K. Garg

CHENNAI: United India Insurance Company Ltd. has reported a net profit of Rs. 307.71 crore on a net premium income of about Rs. 2,162 crore during 2004-05, down from Rs. 380.45 crore on a net premium income of about Rs. 2,136 crore in 2003-04.

Addressing a press conference here on Tuesday, M. K. Garg, Chairman and Managing Director, admitted that some growth targets were missed as a result of pruning of some business segments. He expected the current measures to yield positive results in two to three years.

As a result of the strategy of pruning non-performing businesses, the share of motor insurance in net premium had come down significantly to 41.33 per cent from 44.91 per cent in the previous year. Even while ruling out the possibility of the company quitting the motor insurance business, he made it clear that United India Insurance would be more prudent in underwriting motor insurance and tighten the control process for claims' settlement.

The CMD said health insurance business was growing but company would exercise due vigil over the business. The net incurred claims on motor insurance was Rs. 1,196.13 crore (Rs. 1,166.43 crore) and on health and hospitals Rs. 282.95 crore (Rs. 227.98 crore). The IC (net incurred claims to net premium) ratio was 133.22 per cent (120.72 per cent) in the case of motor insurance and 120.34 per cent (101.85 per cent) in the case of health and hospital.

The company had benefited from the momentum in the capital market through careful investment and booked a profit of Rs. 463 crore (Rs. 360 crore). The market value of the equity portfolio had gone up to Rs. 389 crore, he said. Income from investment stood at Rs. 582 crore, up from Rs. 569 crore in the preceding year, he added.

Mr. Garg said his company was targeting 9-10 per cent growth in premium income this year. He was betting on the retail rural segment by focussing on the bancassurance model. The rural segment fetched a premium income of Rs. 370 crore (Rs. 353 crore), representing 12.5 per cent of the total premium income. He expected the premium income from this segment to scale Rs. 400 crore this year.

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