Chennai, May 14 (IBNS) Royal Sundaram Alliance Insurance Company Limited, a joint venture between Sundaram Finance and Royal & Sun Alliance Insurance plc, UK, announced its annual results for the year ended March 31, 2012, where it recorded a 29% top-line growth.
The Company has achieved a top-line growth of 29% by underwriting Rs 1479.79 crore GWP during the financial year 2011-12, as compared to GWP of Rs. 1143.99 crore, in the previous year.
The Company has also recorded a Profit after Tax (after pool loss) of Rs. 0.22 crore compared to a loss of Rs.20.1 crore in the previous financial year.
Speaking on the performance, Ajay Bimbhet, Managing Director, said, "It is quite satisfying that we have been consistently outpacing the industry growth. Our current year's growth is reflected in all lines of business and attributed to our prudent underwriting practices. Despite the challenges faced, Royal Sundaram has been able to keep pace with growth."
Motor Third Party Pool Loss
The Insurance Regulatory Development Authority (IRDA) decided to dismantle the Indian Motor Third Party Pool with effect from March 31, 2012 by way of orders issued on December 23, 2011, January 3, 2012 and March 22, 2012. IRDA also advised absorption of the losses of Third-Party Motor Pool as per the prescribed methodology in the order.
Based on this, Royal Sundaram's minimum required claims provision for FY 2011-12 was Rs.117.74 crore. However, the Company, as a matter of prudence, has provided for a higher amount of Rs. 222.49 crore, towards the Motor Pool losses so that the quantum of losses to be absorbed in the next 2 years stands reduced.
Earlier, during 2010-2011, the Company had absorbed a net loss of Rs. 75.81 crore based on the IRDA order dated March 12, 2011, increasing the loss ratio from 127 per cent (2009-10) to 153 per cent.
The Shareholders of Royal Sundaram had infused an additional capital of Rs.64 crore (including a share premium of Rs.24 crore), during March 2012 in order to maintain the stipulated solvency margin and address the capital requirement position impacted due to absorption of the losses from Motor Third Party Pool.
"Royal Sundaram has maintained a solvency margin of 1.36 times as against 1.30 times, stipulated by the Regulator for the year ended 31st March 2012". This infusion of Rs. 64 crore is a reaffirmation of our Shareholders´ confidence in the Company´s promising performance," said Bimbhet.
Commenting on the portfolio performance and strategy, he said, "A significant contributor of our overall growth has been the drive from Government initiated health scheme RSBY and other rural insurance business.
"Going forward, we will continue our focus in further developing the growth in Retail business, with greater emphasis on Retail Health Insurance business and SME business."