New Delhi: Bajaj Allianz General Insurance has managed to improve its net profit by 10 per cent to Rs 51.6 crore in fiscal ended March ’05-06 despite facing exceptional claims on account of floods in Mumbai and Gujarat reports Economic Times.
It also managed to report an underwriting profit of Rs 27 crore, which was 18 per cent lower than last year on account of the claims. Kamesh Goyal, CEO, Bajaj Allianz, said that the company’s premium income had jumped 50 per cent to Rs 1,285 crore.
The improved business enabled the bank to generate higher investment income, which enabled the rise in net profit despite the decline in underwriting profit.
Underwriting profit represents the surplus of premium over claims but does not take into account the income earned on reserves set aside for the higher business.
The higher earnings had pushed the company’s net worth to over Rs 300 crore which has enabled it to obtain an "IAAA" rating from ICRA which represents a high claims paying ability, he said.
"Last year our underwriting profits were the highest and we expect it to be the same this year," said Mr Goyal.
He added that the company was focusing on underwriting profits as the industry was likely to witness competition following de-tariffing in ’07.
According to Mr Goyal, the floods in Mumbai had resulted in claims amounting to Rs 350 crore.
"While the flood losses worsened our claims ratio to 70 per cent of premium from 62 per cent last year, the event has helped us to demonstrate our ability to pay large claims" he added.
The company was also able to bring down its management expenses ratio to 25.6 per cent, which includes commission, thereby helping profits.
The company has not seen a significant change in its product mix. During ’05-06, motor insurance accounted for 42 per cent of total premium, while property and engineering contributed 39 per cent, health and travel bring in 8 per cent of the income while other smaller categories accounted for 11 per cent.
Bajaj Allianz has a presence in 100 towns across the country and has plans to expand its network during the current fiscal.
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