United India Insurance plans to restructure by right-sizing loss-making portfolios

Shobha Roy

United India Insurance is looking to reorganise its business by consolidating its presence in some “loss-making” portfolios such as group health. It also aims to enhance focus on liabilities and fire segments.

According to KB Vijay Srinivas, Director and General Manager, United India, the restructuring is likely to be completed over the next 12 months, and will help shore up profitability.

“We are in the process of reorganising our businesses by right-sizing some unwanted and loss-making portfolios such as group health where pricing has been under pressure. We are trying to create a portfolio which is profitable,” Srinivas told BusinessLine on the sidelines of the Brand Science 2018 and Excellence Awards, organised by Assocham, on Friday.

For the year ended March 31, 2018, the state-owned general insurer reported a net profit of ₹1,003 crore, compared to a loss of ₹1,914 crore in the previous fiscal, backed by significantly lower underwriting losses. The underwriting losses fell by almost half to ₹2,542 crore in FY18, compared to ₹4,444 crore in FY17.

Its gross premium income, driven primarily by motor, health and crop, grew by 9 per cent at ₹17,430 crore in FY18.

While the company is yet to declare the results for the first quarter (April-June) of FY19, Srinivas said the premium income could be slightly lower in the first quarter due to the “right-sizing” of portfolio.

“Liabilities and fire, put together, currently account for about 7 per cent of our total business; we would expect it to increase to 12 per cent in the next one-to-two years,” he said. During FY18, United India managed to take the solvency ratio to 1.54 per cent (1.5 per cent is stipulated by the regulator) against 1.15 per cent as of March 31, 2017.

It expects the solvency ratio to be around the 1.5 per cent levels at the end of this fiscal also.

Apart from reorganising its business, the company is also looking into rationalisation of expenses to improve profitability. It is in the process of identifying loss-making branches.

“We have around 2,100 branches spread across the country. We have set up a team to study loss-making branches. We are trying to assess how to rationalise them,” he said.

When asked about the status of the talks to merge the three general insurance companies – National Insurance Company, United India and Oriental India Insurance – into a single entity, he said: “The background work is on; an advertisement has been floated to call for expression of interest for appointing a consultant to look into the process of merger. Further work is on.”

Kerala claims

According to Srinivas, while the final picture on exact claims is yet to emerge, the initial claims from people affected by the flood in Kerala is estimated to be close to ₹250-300 crore.

“Claims have started coming in and till date it is to the tune of about ₹250-300 crore, primarily from motor, cattle and property. We will get the final estimate by the end of next week,” he said.

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