Private non life insurers hit the profit track

Venkatachari Jagannathan
12 June 2004

Four years after the non-life insurance sector was opened to the private sector, four private insurers have hit the profit track. The four who have posted net profits are Tata AIG General Insurance Company Limited (Rs15 crore), Royal Sundaram Alliance Insurance Company Limited (Rs8 crore), Bajaj Allianz General Insurance Company Limited (Rs21.7 crore) and ICICI Lombard General Insurance Company Limited (before tax profit Rs42.2 crore).

Six of the eight new players have completed three or more full years of operations. And this is also the first time such a large number of the new entrants are declaring net profits, though ICICI Lombard and IFFCO Tokio General Insurance Company Limited had posted profits even in 2002-03.

Despite the falling interest rates and the average yield on investments hovering around 6 per cent, new insurers have actually started showing profits before the five years they had expected to take.

Antony Jacob, managing director, Royal Sundaram, is pleased with his compamy's performance. "We exceeded the profit target by Rs1 crore," he says.

Others like Cholamandalam MS General Insurance Company Limited are confident of joining the pack next year. Says Arun Agarwal, CEO, "Last fiscal was our first full year of operations. We are confident of posting a net profit this year."

The year 2003-04 saw the non- life insurance market touching Rs16,118.39 crore, up from Rs14,642.52 crore in the previous year. In 2001-02 the total market size was
Rs12, 095.95 crore.