Claim ratios dropped to 65pc from 73pc in 2007 as listed general insurance companies suffered investment losses in equity markets.
Profits of non life insurance sector has recorded a net loss of Rs4.8 billion the in year 2008 versus the profits of Rs26.5 billion in 2007 on the back of turmoil in equity markets, JS Research reported.
Major listed non life insurance companies have announced their 2008 results. These companies have posted a net loss of Rs4.8 billion mainly due to a huge investment loss of Rs4.8 billion on account of downturn in equity markets. JS sample is based on 11 out of the total 24 listed non-life insurance companies, representing approximately 85 per cent of the total listed sector gross premiums and 90 per cent of listed non life market capitalization. Top line posted another year of decent growth as net premiums of the sector rose to Rs18.2 billion, up 16 per cent YoY.
However, net claims only rose by 3 per cent to Rs11.8 billion as claim ratio normalized to 65 per cent in 2008 versus 73 per cent in 2007, while expense ratio remained steady at 18 per cent. Claim ratio has risen to 73 per cent in 2007 on account of unfortunate events of Dec 27, 2007. As a result, underwriting profits rose to Rs1.6 billion up a massive 358 per cent from Rs348 million in 2007.
Despite strong showing by the insurance business, turmoil in the equity markets resulted in investment income turning in to the red with total investment loss of Rs4.8 billion versus an investment income of Rs27 billion in 2008. This was first time in this decade that the non life sector has posted a net loss during a financial year.
Courtsey: The News
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