Back in black on investment income
State-owned United Insurance Company Ltd. (UICO) has returned to black, aided by a combination of rise in investment income, prudent choice of clients and right product pricing.
The insurer reported a net profit of ₹1,003 crore for 2017-18 against a loss of ₹1,914 crore in 2016-17.
A big rise in net investment income at ₹3,770 crore (₹2,532 crore) largely aided the company’s return to profit during the year.
The year 2016-17 saw unprecedented loss because the insurance regulator IRDA tightened provisioning norms, especially claims related to the third party losses, said M. N. Sarma, CMD, while addressing the media.
Also, unbridled competition in group health insurance led to heavy losses, he added. In 2017-18, however, the insurer deliberately adopted the path of restraint and avoided price wars.
To a question, he said United India Insurance would have given up business worth at least ₹ 800 crore as it refused to engage itself in price competition. This caution had largely reflected in the overall business, which grew less than the industry average. He, however, said that measures pursued last year would be continued this year also.
Mr. Sarma said that motor, health and crop would be growth areas for UICO. Asserting that “health cannot be ignored,” he said the insurer would soon introduce a host of new products offering higher health insurance cover. The company was toying with the idea of offering title insurance and defect liability cover in the housing sphere in the wake of tightening real estate norms.
Premium income
Gross premium income rose to ₹17,430 crore (₹ 16,063 crore) during the year under review. Net earned premium stood at ₹ 12,861 crore (₹12,032 crore). Underwriting loss had reduced substantially to ₹2,542 crore (₹4,444 crore). Solvency ratio improved to 1.54 against 1.15 as on March 31, 2017.
UICO also raised sub-ordinated debt to the tune of ₹900 crore at an average cost of 8.25% just ahead of the markets firming up.
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