SBI General Insurance, a joint venture between State Bank of India (SBI) and Insurance Australia Group (IAG), reported profit after tax of Rs 153 crore in financial year 2016-17. This was the first time the insurer posted profits since starting operations in 2009-10.
In 2015-16, it suffered a loss of Rs 120 crore. “The rise in profits is likely due to the risk selection coupled with better expense control, efficient claims management and using re-insurance facilities in much more efficient way. We have also been conscious pricing at which any risk is written. That is the philosophy that any risk should be appropriately priced,” said Pushan Mahapatra, MD and CEO at SBI General.
The net worth of the company as on last financial year was Rs 1,098 crore. Senior officials said the reason for the performance was also because of underwriting profits in segments such as health and fire insurance. Underwriting losses, which was Rs 375 crore in 2015-16, improved to Rs 197 crore in fiscal year 2016-17 and SBI General is hopeful that by 2019 the company might make underwriting profits.
SBI General’s Investment income for 2016-17 was Rs 345 crore, up by 31%, against the previous fiscal year. In the last financial year, SBI General had seen its gross direct premium at Rs 2,604.48 crore against Rs 2,039.84 crore in 2015-16 – a growth of 27.68%, having a market share of 2.05%. Officials also added that, process is on to hike the stake from 26% to 49% of IAG in the joint venture. Solvency of SBI General also improved from 1.81% in financial year 2015-16 to 2.19% in the last fiscal year.
In the last financial year, general insurance companies saw their gross direct premium at Rs 1.27 lakh-crore – a growth of 32% in financial year 2016-17. Sharp growth in the non-life sector was largely due to the growth in health and motor insurance along with new crop insurance scheme, say market participants.
Even HDFC ERGO had reported a profit after tax of Rs 277.2 crore in 2016-17 compared to Rs 151.3 crore – a growth of 83.2%. While profit after tax of ICICI Lombard General Insurance in FY2017 rose to Rs 701.9 crore at a growth rate of 38.3% compared to Rs 507.5 crore in FY2016.