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Chennai, Sep 30 (IANS) The government-owned non-life insurer, National Insurance Company Ltd, has closed the last fiscal with a net loss of Rs 4,108 crore, affecting its net worth and solvency, a top company official said on Wednesday.
In a communication to the employees, its Chairman-cum-Managing Director Tajinder Mukherjee said: "Our final accounts for FY 2019-20 have been adopted by the Board on September 26. As you would have seen, the company made a net loss of Rs 4,108 crore, which severely impacted its net worth and solvency."
She said the losses for the third consecutive year could be attributed to: (a) high claims ratio in major portfolios like motor, health and crop (b) increased provisions of IBNR (claims incurred but not reported by policyholders), and (c) provisions for employees' future pension liabilities.
"Despite the recurring losses, I assure you that the company is not facing any liquidity crunch and all payments towards claimants, vendors and employees are being released on time," she told her colleagues.
According to her, the process of rationalisation of IBNR, particularly for motor third-party portfolio, began in 2017-18 and the company has added over Rs 6,000 crore to its value in these three years.
Mukherjee said that an additional Rs 1,430 crore in 2019-20, compared with FY 2018-19, was provided for employees' pension liabilities.
Expressing concern over the incurred claims ratios (ICR) of certain offices, she said that the corporate office has initiated steps for managing and monitoring claims to reduce the overall ratio.
Pointing out to capital infusion of Rs 1,675 crore by the government in July 2020, Mukherjee said further capital infusion this year is linked to achievement of key performance indicators (KPI) for growth, ICR, and curtailment of expenses.
She said the exercise for restructuring of offices is underway to make each of the operating units viable.
(Venkatachari Jagannathan can be contacted at v.jagannathan@ians.in)
--IANS
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