Bajaj Finserv, the financial services company spun off from Bajaj Auto, reported good results for the June 2009 quarter. Its income –earned from life and general insurance, retail lending and other financial services- rose by 59% to Rs 106.2 crore. Despite a sharp increase in employee costs, its net profit for the quarter was Rs 66.9 crore compared to a loss of Rs 44.1 crore. The key reason for the turnaround in its performance is an increase in its income from investments.
Highlights
Business Performance
Gross written premium in the life insurance business increased by 8.33% to Rs 2,001 crore. But new business premium dropped by 43.5% to Rs 577 crore compared to Rs 828 crore. The press release gives no specific reasons for the drop in business. The industry has faced a drop in premium from unit-linked policies, which may be one reason.
Gross written premium in the general insurance business declined by 13.5% to Rs 634.6 crore. The company said that growth slackened in the market and corporate renewals in April saw significant discounts, with the public sector companies becoming more competitive.
The retail finance business was spurred on by the revival in the motorcycles’ business, with the company’s disbursals rising by 65% to Rs 1,046 crore.
Revenues
The life insurance business saw its net earned premium rise by 8.2% to Rs 1,994 crore while investment income rose to Rs 4,777 crore compared to a loss of Rs 1,362 crore in the June 2008 quarter. It includes an unrealised gain of Rs 4,009 crore compared to a loss of Rs 1,409 crore.
Net earned premium of the general insurance business rose by 6.4% to Rs 432.1 crore. And, investment and other income increased by 57% to Rs 58 crore.
Investments and others contributed Rs 32 crore against Rs 15.7 crore.
Profits
In the life insurance, though net premium growth was low, Bajaj Allianz Life Insurance company lowered its commission/gross written premium by 400 basis points and its operating expenses/gross written premium by 190 basis points. As a result, its segment profit was Rs 10 crore compared to a loss of Rs 70 crore.
In the general insurance business, its segment profit rose more than three-fold to Rs 42 crore.
Retail financing brought in Rs 6 crore, compared to Rs 1 crore and investments contributed Rs 18 crore to segment profit, compared to Rs 12 crore.
Bottom-line
As a result of better profits from all its businesses, Bajaj Finserv’s profit before tax was Rs 73 crore compared to a loss of Rs 43 crore. And, its net profit was Rs 42 crore compared to a loss of Rs 36 crore. Its profit for the first quarter equals nearly 60% of the full year’s net profit in 2008-09.