MUMBAI: New India Assurance Company Limited has announced impressive financial results for the third quarter of fiscal year 2026, showcasing significant growth in profitability despite facing substantial one-time provisions. The state-owned general insurer reported a 28.86% year-on-year increase in net profit, which climbed to Rs 826 crore for the December quarter. This robust performance was primarily fueled by higher investment income and steady growth in premium collections, although underwriting results were weighed down by wage-related provisions.
Strong Financial Performance Across Key Metrics
The company's profit before tax witnessed an even more remarkable surge, rising 61.89% year-on-year to Rs 824 crore during Q3 FY26. Premium income remained firm throughout the quarter, with gross written premium increasing by 10.47% to Rs 35,555 crore. This growth was complemented by a 10.4% rise in net written premium to Rs 29,326 crore and a 9.34% increase in net earned premium to Rs 28,494 crore.
Segment-Wise Premium Performance
The health and personal accident segment emerged as the star performer, expanding by 16.15% year-on-year to Rs 17,127 crore. This segment has reinforced its position as the company's largest business line, now accounting for 48% of New India Assurance's total business. The fire insurance segment also showed strong growth, with premiums increasing by 15.31% to Rs 5,519 crore.
However, the motor insurance segment experienced a mild contraction during the quarter. Motor third-party premium declined by 1.04%, while motor own-damage premium decreased by 1.34%, reflecting changing market dynamics in this particular insurance category.
Impact of Wage Provisions on Underwriting Results
The company recognized provisions of approximately Rs 2,500 crore toward wage arrears and retirement benefits, which had a substantial impact on underwriting performance. Specifically, Rs 1,696 crore allocated for wage arrears and retirement benefits pushed the underwriting loss to Rs 7,046 crore, compared to Rs 4,982 crore in the same quarter of the previous year.
This resulted in a claims ratio of 99.62% for the quarter, while the expense ratio rose to 14.56%, taking the combined ratio to 124.01%. Management clarified that this impact was largely due to wage revisions implemented in January, which required total provisions of around Rs 2,500 crore.
Expense Analysis and Market Position
Net incurred claims climbed by 11.85% to Rs 28,387 crore, reflecting higher claims across various segments. Commission expenses increased by 14.18% to Rs 2,883 crore, while operating expenses jumped significantly by 36.07% to Rs 4,270 crore, largely attributable to provisions toward wage arrears and retirement benefits.
Despite these challenges, Chairperson Girija Subramanian highlighted that domestic gross direct premium growth outpaced the industry average, helping lift the insurer's market share to 13.4%. She added that global gross written premium for the nine-month period grew by 10.5%, indicating strong performance across both domestic and international operations.
Investment Income Provides Crucial Cushion
Investment income played a pivotal role in offsetting the impact of wage provisions, rising by an impressive 50.99% year-on-year to Rs 8,599 crore. This robust performance was supported by gains from the equity portfolio and favourable market conditions, providing a substantial cushion against the one-time costs associated with wage revisions.
Subramanian emphasized this point, stating: "While the wage provisions had a substantial impact on the Combined Operating Ratio, it was partially offset by robust investment income from our equity portfolio. Despite these one-time costs, the company reported stellar Profit Before Tax."
Nine-Month Performance and Solvency Position
For the nine months ended December, the company reported profit before tax growth of approximately 62%, demonstrating consistent performance throughout the fiscal year. The insurer closed the quarter with a solvency ratio of 1.81 times, which is well above the regulatory threshold and indicates a strong capital position.
Management expressed optimism about sustaining growth momentum amid ongoing reforms in the insurance sector and the company's stable capital position. This positive outlook is supported by the strong performance in premium collections, particularly in the health and personal accident segments, and the robust investment income that has provided significant financial stability.
The results demonstrate New India Assurance's ability to navigate challenging circumstances while maintaining growth in key business areas, positioning the company favorably in India's competitive insurance market as it continues to expand its market share and strengthen its financial foundation.
