New India Assurance shares fell nearly 5% in intraday trade on Monday after the state-owned general insurer company slipped into losses in the June quarter, even as its net premium earned registered modest growth.
The stock was trading at Rs 165.5 apiece on NSE around 10:37 am, losing over 4.53% since its previous close at Rs 173.2. The benchmark index Nifty 50 gained marginally by 0.55%, on the contrary.
Investors were tracking the sharp deterioration in profitability along with the insurer's solvency position during the quarter.
New India Assurance Q1 Results
New India Assurance reported a consolidated net loss of Rs 244 crore for the quarter ended June, compared with a net profit of Rs 392 crore in the corresponding period last year.
However, net premium earned continued to grow at a modest pace during the quarter. It rose 3.4% year-on-year to Rs 9,747 crore from Rs 9,424 crore in the same quarter of the previous financial year.
The rise in premium income, however, was not enough to prevent the company from reporting a loss during the period.
The insurer's solvency ratio stood at 1.80 at the end of the June quarter, compared with 1.84 in the preceding quarter.
The solvency ratio is an important measure of an insurer's financial strength and indicates its ability to meet long-term obligations and claims. A higher ratio generally points to a stronger capital cushion.
The combination of a quarterly loss and a sequential decline in the solvency ratio weighed on investor sentiment following the earnings announcement.
New India Assurance Share Price Movement
Over the past month, the stock lost over 10.3%; however, it remained up around 6.5% since the beginning of this year.
Having said that, in the past week itself, the stock declined over 6.5%, which also incorporated today's fall.
The stock will remain in focus as investors assess whether premium growth can translate into an improvement in profitability over the coming quarters and track trends in claims, underwriting performance and the company's solvency position.
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