The three-and-half-year-old Cholamandalam MS General Insurance, which hoped to post maiden profits in 2005-06, ended the year at net loss of Rs 3.1 crore (Rs 31 million) owing to claims from floods in Mumbai, Bangalore and Chennai.
According to officials, the company's loss from the flood claims stood at Rs 8 crore (Rs 80 million). The total claims from the floods are estimated to be over Rs 70 crore (Rs 700 million). Usually, insurance firms take cover from re-insurance companies to mitigate losses arising from claims.
In September 2005, M Anandan, managing director, Cholamandalam Investments and Finance Company, who now heads the insurance company, had said though the claims from insuring cars and households were large and small in claim value from Mumbai floods, high-value claims came from insuring warehouses of companies that were flooded.
Cholamandalam MS General Insurance was positive that it would break-even in 2005-06 as Mumbai floods happened during the first quarter of the financial year and not the fag end and expected to underwrite larger premium income.
However floods in Chennai and Bangalore during November and December contributed to impact the company's claims.
The losses from Mumbai floods amounted to Rs 4.5 crore (Rs 45 million) while losses from Chennai and Bangalore was Rs 3.5 crore (35 million).
The company had garnered a total premium of Rs 220 crore (Rs 2.2 billion) in 2005-06 compared to Rs 169 crore (Rs 1.69 billion) last year. Of the eight private players in general insurance seven of them already reported profits.
Cholamandalam MS is one of the last players to enter the market during October 2002. The company reported a loss of Rs 3.4 crore (Rs 34 million) in 2004-05 compared to Rs 6.1 crore (Rs 61 million) the previous year.
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