Shriram General Insurance Company, whose business almost entirely is composed of motor insurance, is seeing annual growth of 30 per cent in gross written premium. To buttress this growth, the company intends to hire 700 people this year.
Addressing journalists here today, Anil Aggarwal, MD & CEO of the company, said 500 persons would be recruited for marketing and the rest would be support staff.
In 2022-23, the company earned premium income of ₹2,267 crore. The company expects to grow 30 per cent in the current year and the next, Aggarwal said. The expected growth is also the reason the company’s solvency ratio — ratio of capital to risk accepted, a measure of capital adequacy — stands at an elevated level of 4.83, against the statutory requirement of 1.5.
Aggarwal said the company is confident that it would grow 30 per cent in the current year stems from the 39 per cent growth in premiums collected in the first quarter of the current year. He said that today 90 per cent of the premia come from motor insurance; the company intends to bring it down to 85 as early as possible, by diversifying into other lines, such as health, cyber-security and travel — or any line except crop insurance, where “we burnt our fingers in 2016-17”.
Shriram General is a joint venture of the Chennai-based Shriram group, which is predominantly into financial services, and Sanlam of South Africa. Shriram Finance, the group’s flagship company, is a non-banking finance company that specialises in lending for the purchase of used trucks, a high-risk, high-rewards business that the company has perfected over the last quarter century. Shriram General’s DNA is therefore ‘motor’.
Q1 net rises
In the first quarter of the current year, it made a net profit of ₹98 crore compared with ₹71 crore in the corresponding quarter of last year. Profits come from investing the premia, while there is an underwriting loss (premia collected less claims paid.) On the company making underwriting loss, Aggarwal said that the regulations were conservatively skewed in terms of providing for long term claims upfront. The underwriting loss is therefore only a ‘technical loss’.
“The profits are in the pocket, but they don’t show-up in the books,” he said. Aggarwal, a chartered accountant, observed that it was fine to be conservative in accounting.