Oriental Insurance Company has turned around with a net profit of Rs 64 crore (Rs 640 million) last fiscal, and targets to achieve about 10 per cent growth in premium income during 2003-04.

"It was not an easy task to recover from a Rs 235 crore (Rs 2,350 million) loss in 2001-02 and post a net profit of Rs 64 crore in 2002-03. This fiscal, we will improve upon our net profits of last fiscal," OIC chairman S L Mohan told reporters after the board meeting in New Delhi on Monday.

He said the company targets a 10 per cent growth in gross premium income at over Rs 3,060 crore (Rs 30.60 billion) in this fiscal compared to Rs 2,868 crore (Rs 28.68 billion) in 2002-03.

"There are visible signs of market expansion. We will be concentrating on personal and health insurance segment," Mohan said, adding its health portfolio was growing by 30 per cent.

The turn-around was possible despite a Rs 49.54 crore (Rs 495.4 million) outgo for the voluntary retirement scheme and adherence to strict accounting norms in providing for all known liabilities.

OIC increased its reserves and surplus by Rs 161 crore (Rs 1,610 million) to Rs 734 crore (Rs 7,340 million) last fiscal, while hiking its solvency ratio to 1.23 in 2002-03 from 1.01 in previous fiscal. IRDA stipulates a minimum solvency ratio of 1.0 for general insurers.

Mohan did not rule out tapping the capital market in future but said, "There is no such plan immediately. But the company's Rs 100 crore (Rs 1,000 million) equity has been transferred to government from GIC."

The transfer of equity follows amendments in the General Insurance Business Nationalisation Act, passed by the Parliament a few months ago.

The country's fourth largest general insurer posted an operating profit of Rs 176 crore (Rs 1,760 million) last fiscal compared to Rs 235 crore (Rs 2,350 million) loss in 2001-02.

The higher profitability was possible on account of sharp decline in loss ratios in motor own damage from 79 to 64 per cent, motor third party (337 to 206 per cent), health (96 to 77 per cent), fire (49 to 38 per cent) and personal accident (116 to 93 per cent).

Management expenses also came down from 24.37 to 22.75 per cent.

Mohan said the company was initiating several measures to sustain and improve the performance.

Oriental recently launched a comprehensive scheme - Sweet Home Insurance - for the middle class at a nominal premium of Rs 253-1,076.

He said the Universal Health Insurance Scheme, launched by the prime minister in July, was receiving brisk response and the company has already sold policies covering 21,000 individuals for a premium of Rs 36 lakh (Rs 3.6 million).