PSU Insurers Likely To Witness Underwriting Profits

Bangalore: This year, the underwriting business of the four public sector general insurers is likely to slip into the black with the transfer of the high loss statutory business to the India Motor insurance Pool (IMIP). The transfer to the IMIP would cause reduce losses incurred due to claims settlements on motor third party liabilities. This was because the losses would now be split among the 13 general insurers in the country, nine of them in the private sector. The sources said that the benefits would accrue not just from loss reduction and greater retentions. The benefits would also come in the form of lower transfers to technical reserves. The technical reserves include the Reserves for unexpired losses and provisions for Incurred, But Not Reported risk. Both these are not treated as part of the capital.

With the start of the pool this year, private sector insurers would no longer be able to write back as in the past. This was because the liabilities from the pool are to be shared on the basis of the respective market share. The sources said that the large transfers to the provisions in the past had impacted the underwriting profits of the PSU insurers since technical provisions are treated as above-the-line items. The sources said that as the losses of the PSU insurers reduce due to the transfer to IMIP, they would also be in a position to write back excess provisions into their respective profit and loss accounts and improve their profits. In fact, the sources said that IMIP was also likely to help in improving their underwriting margins beginning from the current financial year. Underwriting margins, a measure of profitability, are expected to be close to 2 per cent this year.

BHEL, Trichy Secures Rs 15000cr Orders

Trichy: Bharat Heavy Electricals Limited (BHEL), Trichy, has secured orders worth Rs 15,000 crore, its all-time high. BHEL, said the recent MoU with the TNEB for setting up two 800 Mw thermal power stations near Chennai had resulted in the power plant major bagging orders. The PSU was also increasing capacity addition and in the first phase, the manufacturing capacity was increased to 10,000 Mw. The second phase, which will see its capacity upgraded to 15,000 Mw per year, will be finished by March 2009. The ongoing second phase expansion at an investment of Rs 732 crore was the single largest investment in the history of BHEL, Trichy.