Armed with an `AAA' rating from the Crisil, D Sengupta, the Chairman and Managing Director of New India Assurance is gearing up for the competition from the multinationals, if the industry is thrown open to them in the future. New India is the first Indian insurance company to get the `AAA' rating which reflects highest financial strength of the company to meet policy holders' obligations.Founded by the Tatas, New India is looking at new business opportunities internationally as well as strengthening its leading position in the country. Starting his career with a British firm, Sengupta worked his way up in the industry. Before New India, Sengupta was working with the National Insurance as a general manager. After a presentation recently on how the rating would help the company, Sengupta spoke to DEV CHATTERJEE on various issues.Excerpts.
How do you think a `AAA' rating by Crisil will help you to stay ahead in the race after the liberalisation of the industry?There was nospecific reason when we went for a rating. We think we are a sound financial institution and therefore, invited Credit Rating Information Services of India Ltd (Crisil) to rate us. The rating was also taken as Standard and Poor had downgraded the country and all the companies were rated below the country's sovereign rating whether they are good or bad. The rating has already helped us to get good rates in the re-insurance business in the international markets.
The downgrade had earlier affected our re-insurance acceptability overseas, ... now we have already received better bargains and recovered our rating fees to Crisil. The rating reflects highest financial strength of the company to meet policy holders obligations, and also reflects strong capitalisation, stable profitability and low risk profile of the asset portfolio of the company.
Do you think that the recent nuclear tests and the resultant sanctions on India would affect your negotiating powers in the international re-insurance markets?Ido not think that the tests or the sanctions imposed by the US government will affect our business or of our clients. Most of our re-insurance business is conducted in London and Japan, where the business decisions are usually free from the sanctions imposed by the US government.
What do you think is the status of Indian insurance industry after the liberalisation?The Indian insurance companies must get ready for the entry of multinationals. A recent consumer research has shown that they are not satisfied with the working of the Indian companies and they want MNCs to come. We have to, therefore, become more consumer-oriented and efficient.
We are not afraid of competition from the MNCs. In fact, both MNCs and the Indian companies can learn from each other's experience.
Do you think a merger of all the four subsidiaries of GIC is possible as world over insurance companies are consolidating?I do not think a merger in the present circumtances would help the industry. A merger would certainlyprovide the financial muscle to all the insurance companies. But, as of date, I do not see any need to merge all the four companies.
How New India is gearing up for the challenges ahead?New India will remain a market leader even if the market is thrown open to the foreigners. We are trying hard to improve our claim payment period to one month. We are now focussing on improving the levels of computerisation and the quality and timeliness of management information system (MIS) reporting. For this, we taken the initiative by commencing the process of integrated computerisation initially in the city of Mumbai along with visible customer information system which will be extended to the rest of the country. We have already budgeted Rs 150 crore initially towards achieving this goal.
What about your overseas operations?We are also having relook at our overseas operations in 22 countries to become players in identified areas from merely being present. Given an opportunity, we are also looking at thepossibility of taking over small and medium insurance companies around the world to cover the niche segments. We will opt for low volume but high margins business in our international business.
You are making losses on the third party motor insurance. How are you planning to plug this loophole?The losses of the third party motor insurance is an industry phenomena as compared to the premium income where the claim amount is quite high. Also this has something to do with the Tariff Advisory Committee (TAC) keeping the third party motor insurance tariff low. However, recently TAC has revised the rates over the next three years which would help us to reach break-even point.
How was the fiscal 1997-98 for the company?For the year 1997-98, we are expecting a profit before tax of Rs 470 crore as compared to Rs 357.69 crore recorded in the previous year. The profit amount is provisional as a final figure will be available later in the year after the numbers in respect of re-insurance are obtained.The premium income was around Rs 2440.83 crore while the investment income is also expected to be higher at around Rs 551 crore. On account of the fall in interest, the yield on investments has come down to 11.7 per cent.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
