Bajaj Allianz Life Insurance has reported a net profit of Rs 427 crore in 2009-10 beside a net profit of Rs 70 crore in the corresponding period last year. For the same period, Bajaj Allianz General — the non-life support of the group — has reported a net profit of Rs 121 crore against Rs 95 crore in 2008-09.
Total profits of a life insurance company has two segments — profits on the policyholder’s account and profits on the shareholder’s account. Policyholder profits reproduce largely the performance of the life insurance business.
The company’s profit is the highest in private life insurance industry. Among the top 5, ICICI Prudential reported a profit of Rs 258 crore for the first time, which SBI Life had reported a profit of Rs 276 crore. Most of the private life insurance companies carry on being in the red. However, Kotak Mahindra Life had reported a net last year and is estimated to have a higher surplus this year as well.
On the shareholder’s account, Bajaj Allianz has posted a profit of Rs 542 crore against a loss of Rs 70 crore last year. This profit includes a transfer of Rs 125 crore from funds for future appropriation, a large part of which is a result of appropriation of reserves set aside for lapsed unit-linked policies, which are now doubtful to be revived. In addition to this, profits have been bolstered by one-time service tax gain of Rs 156 crore. Without these two exceptional items, the net profit would have been below Rs 300 crore.
Bajaj Allianz Life’s managed to record a 7% growth in its Gross Written Premium (GWP), which touched Rs 11,420 crore, thanks to renewals. New business premium marginally declined to Rs 4,451 crore from Rs 4,491 crore in the previous year. Speaking to ET, CEO Kamesh Goyal said the company continues to be the most capital efficient and did not require any capital mixture for the last two years. Even without capital infusion, Bajaj Allianz Life had a solvency margin of 268% of the statutory requirement.
Both Bajaj Allianz Life and Bajaj Allianz General are subsidiaries of Bajaj FinServ — the companies carved out of Bajaj Auto’s financial service business a few years ago. Until last year, the insurance businesses contributed up to two-thirds of FinServ’s profits.
In non-life, Bajaj has taken a conscious decision to slow down and degrow its business because of the competition. The company managed to grow its profits because of a reduction in expenses, however, underwriting margins worsened by a few percentage points. The non-life company was recently rated ‘iAAA’, which reflects highest claims paying ability from Icra.
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