KATHMANDU, Dec 25, 2012
Country´s non-life insurance industry was in the red in the first quarter of the current fiscal year as huge underwriting loss erased gains made through hike in net premium income.
The total net loss of non-life insurance companies stood at Rs 88.39 million in the first three-month period of the current fiscal year as against net profit of Rs 117.39 million recorded in the same period last fiscal year, show balance sheets of non-life insurance companies, excluding state-owned Rastriya Beema Sansthan, Shikhar Insurance, National Insurance and NB Insurance that are yet to make their first-quarter financial results public.
The loss was reported as 13 of the 17 insurance companies posted an underwriting loss of Rs 66.68 million, meaning income generated from sales of policies, commission extended by reinsurance companies and returns on various investments could not sustain various forms of expenses, including claim settlement, and bulging provisioning for risks.
The biggest victim of this mismatch was The Oriental Insurance, which posted a net loss of Rs 136.72 million during the review period. The loss was reported despite recording a net premium income of Rs 177.09 million, which was surprisingly also the highest in the industry.
“We were hit with quite a big loss this time because of claim filed by Sita Air,” a high-ranking official of the company told Republica on condition of anonymity.
The insurer, which had insured Sita Air´s aircraft that crashed inside Kathmandu Valley in September, is said to have extended compensation of around Rs 170 million to the airline.
Another big loss maker during the quarter was Everest Insurance, which suffered a net loss of Rs 35.42 million. But unlike The Oriental, Everest incurred the loss largely due to fall in premium income.
The net premium income of the insurance company fell by 43.65 percent in the period to Rs 52.75 million as the insurance sector regulator put a temporary ban on its fire insurance business - one of major revenue generators - after it was found guilty of making excessive advance payment against a fire claim filed by a company owned by one of its promoters.
To protest this as well as issuance of a directive on corporate governance, the company in September stopped issuing new policies for around 10 days, which also left a dent on its income.
“We are expecting the regulator to lift the ban soon following which business will come back to normalcy,” a high-ranking official of Everest Insurance told Republica on condition of anonymity.
Like Everest, Lumbini General Insurance also incurred net loss of Rs 28.02 million due to 24.89 percent fall in net premium income to Rs 71.03 million.
The company - which earlier this year faced regulatory action for conducting credit business, failing to settle claims in time and haphazardly issuing policies without proper evaluation of risks - is also said to have incurred losses in automobile insurance business, which led the company to post underwriting loss of Rs 29.93 million.
Another company, which towed the line of loss-making insurers, was United Insurance. The company suffered a net loss of Rs 5.28 million, despite 21.55-percent hike in net premium income.
“This was because we provisioned around Rs 29.5 million for possible loss likely to arise from the fire that engulfed electronics warehouse of Chaudhary Group in October,” a company official said on condition of anonymity. “If we had not allocated the amount we would have posted profit.”
Net loss of non-life insurers
The Oriental - Rs 136.72 million
Everest - Rs 35.42 million
Lumbini - Rs 28.02 million
United - Rs 5.28 million
Source: Republica
Country´s non-life insurance industry was in the red in the first quarter of the current fiscal year as huge underwriting loss erased gains made through hike in net premium income.
The total net loss of non-life insurance companies stood at Rs 88.39 million in the first three-month period of the current fiscal year as against net profit of Rs 117.39 million recorded in the same period last fiscal year, show balance sheets of non-life insurance companies, excluding state-owned Rastriya Beema Sansthan, Shikhar Insurance, National Insurance and NB Insurance that are yet to make their first-quarter financial results public.
The loss was reported as 13 of the 17 insurance companies posted an underwriting loss of Rs 66.68 million, meaning income generated from sales of policies, commission extended by reinsurance companies and returns on various investments could not sustain various forms of expenses, including claim settlement, and bulging provisioning for risks.
The biggest victim of this mismatch was The Oriental Insurance, which posted a net loss of Rs 136.72 million during the review period. The loss was reported despite recording a net premium income of Rs 177.09 million, which was surprisingly also the highest in the industry.
“We were hit with quite a big loss this time because of claim filed by Sita Air,” a high-ranking official of the company told Republica on condition of anonymity.
The insurer, which had insured Sita Air´s aircraft that crashed inside Kathmandu Valley in September, is said to have extended compensation of around Rs 170 million to the airline.
Another big loss maker during the quarter was Everest Insurance, which suffered a net loss of Rs 35.42 million. But unlike The Oriental, Everest incurred the loss largely due to fall in premium income.
The net premium income of the insurance company fell by 43.65 percent in the period to Rs 52.75 million as the insurance sector regulator put a temporary ban on its fire insurance business - one of major revenue generators - after it was found guilty of making excessive advance payment against a fire claim filed by a company owned by one of its promoters.
To protest this as well as issuance of a directive on corporate governance, the company in September stopped issuing new policies for around 10 days, which also left a dent on its income.
“We are expecting the regulator to lift the ban soon following which business will come back to normalcy,” a high-ranking official of Everest Insurance told Republica on condition of anonymity.
Like Everest, Lumbini General Insurance also incurred net loss of Rs 28.02 million due to 24.89 percent fall in net premium income to Rs 71.03 million.
The company - which earlier this year faced regulatory action for conducting credit business, failing to settle claims in time and haphazardly issuing policies without proper evaluation of risks - is also said to have incurred losses in automobile insurance business, which led the company to post underwriting loss of Rs 29.93 million.
Another company, which towed the line of loss-making insurers, was United Insurance. The company suffered a net loss of Rs 5.28 million, despite 21.55-percent hike in net premium income.
“This was because we provisioned around Rs 29.5 million for possible loss likely to arise from the fire that engulfed electronics warehouse of Chaudhary Group in October,” a company official said on condition of anonymity. “If we had not allocated the amount we would have posted profit.”
Net loss of non-life insurers
The Oriental - Rs 136.72 million
Everest - Rs 35.42 million
Lumbini - Rs 28.02 million
United - Rs 5.28 million
Source: Republica
No comments:
Post a Comment