United India Insurance expects to report lower net profits for 2010-11 due to higher provisioning on wages and motor pool losses. The company made a net profit of Rs 707 crore in 2009-10, the highest among the public sector insurers. United India's net profit for the first nine months of the current year was Rs 333 crore.

Mr G. Srinivasan, Chairman and Managing Director, United India Insurance, told Business Line that the company had to set aside provisions for wage revision of about Rs 450 crore which is expected to dent its net profits for the just ended financial year.

The insurance regulator has asked all general insurance companies to increase provisioning for losses arising out of accident resulting in fatality or disablement of the third party to about Rs 3,750 crore for the last four years. On account of this, the provisioning which United India Insurance would have to make is Rs 350 crore.

Due to this provisioning, the solvency margin would come down to 3 per cent from 3.5 per cent which is still above the mandated requirement of 1.3 per cent by the regulator, he said.

Underwriting losses

The Chennai-headquartered insurer expects to close the financial year 2010-11 with a premium income of Rs 6,375 crore, a 22 per cent growth over last year. Underwriting losses have gone up due to more claims in health and motor third party insurance.

Mr Srinivasan pointed out that United India had the lowest underwriting losses compared with those of the other three public sector players.

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