The general insurance arm of SBI posted an underwriting profit of Rs 37 crore in H1FY19.
SBI General Insurance posted a 64.4 percent year-on-year (YoY) rise in its net profit for the first half (H1) of FY19 at Rs 217 crore. This was mainly due to a strong underwriting profit of Rs 37 crore in H1FY19 compared to Rs 60 crore underwriting loss a year ago.
The Gross Written Premium (GWP) witnessed a growth of 30 percent YoY to Rs 2,067 crore in H1FY19. The solvency ratio for H1FY19 stood at 2.46, whereas the combined ratio stood at 96.8 percent in H1FY19 compared to 106.8 percent a year ago. The figures for H1FY18 exclude the one-time income from a long-term home reinsurance ceding.
Rikhil K Shah, chief financial officer, SBI General Insurance, told Moneycontrol that the company had a positive performance across the different business segments. On Kerala floods, he said the company took a hit of Rs 30 crore (net of reinsurance).
SBI General is a joint venture between State Bank of India (SBI) and IAG International. The bank is looking to list its general insurer arm in FY20.
From September 1, car and bike owners have been mandatorily asked to buy three-year and five-year third party motor insurance. However, Shah said that the impact of this development will only be seen over the next few quarters.
"Going forward, this will help companies generate more investment income. It will also be beneficial for companies who have tie-ups with OEMs," he added.
With respect to the motor insurance business, Shah said that the motor third party losses exceed 100 percent. However, he said that the own damage losses are around 70 percent. On the health insurance business, Shah said that they are generating underwriting profits since they have a balanced business mix of the corporate and retail business.
In September 2018, SBI approved a 4 percent stake sale in SBI General Insurance to Axis New Opportunities Fund (Axis AMC) and PI Opportunities (Premji). The deal size was Rs 481.73 crore, valuing the non-life insurer at Rs 12,043.25 crore.
The Pradhan Mantri Jan Arogya Yojana (PM-JAY), also called Modicare was launched in September 2018. This scheme offers Rs 5 lakh health insurance covers to individuals below a certain socio-economic status.
Shah, however, said that they are not yet part of the scheme, since they did not get selected through the tenders. This was due to the prices quoted. In the bidding process for selection of insurers to implement Modicare, the lowest quote wins the bid.
