CHAPTER-I

PARTICULARS OF THE ORGANISATION, FUNCTIONS & DUTIES

HISTORY

The Oriental Insurance Company Ltd." earlier known as "The Oriental Fire & General
Insurance Co. Ltd" was incorporated at Bombay on 12th September, 1947. The
Company was a wholly owned subsidiary of The Oriental Government Security Life
Assurance Company limited and was formed to carry out General Insurance business.
The Company was promoted by Sir Purushothamdas Thakurdas, Chairman of Oriental
Government Security Life Assurance Company Ltd., which was transacting life
insurance business for nearly 75 years.

The Company's Head Office was located in Bombay. The premium of the Company in
the first year of its operation was only INR 99950 (US $3000). On nationalization of Life
Insurance business in India, in 1956, the company became a subsidiary of Life
Insurance Corporation of India (LIC). Subsequently on nationalization of general
insurance business in India in the year 1973, the company became one of the
subsidiaries of General Insurance Corporation of India (GIC).

10 Indian and 12 Foreign Insurance companies merged with Oriental Fire & General
Insurance Co. Ltd. At the time of Nationalization in 1973, the Company's Gross Direct
Premium was Rs. 580 Millions ( US $ 16.57 Millions ).The Company's Registered and
Head Office was shifted from Bombay to New Delhi. The name of the Company was
changed in the year 1984 to The Oriental Insurance Company Ltd.

However, after the passage of the Insurance Amendment Bill (2002), Oriental
Insurance Company Limited was delinked from GIC and in 2003 the shares of the
company so far held by GIC have been transferred to Central Government.

LINES OF BUSINESS

The Company underwrites all non-life insurance business in Fire, Marine, Engineering,
Health, Motor and other misc classes of business taking care of needs of industrial
giants as well as common man. The Company has more than 100 different products for
the cross-section of the economy.

PRESENT SET-UP & STATUS

The company has grown over the years and at present operates from 900+ offices in
India with nearly 16,000 committed and dedicated employees with international
presence in Dubai, Nepal and Kuwait. It has continued to achieve highest growth rate
among the public sector non-life insurance companies for the years 2005-06 and 2006-
07. Its gross premium income has reached the level of Rs. 4020 crores (US $ 100 billion
approximately) in the year 2006-07 with operating profit of Rs. 630 crores.

As of March 31, 2007, Oriental’s investment portfolio is of Rs 10,869 crore as against Rs

11,262 crore on March 31, 2006. Oriental Insurance issued 99,24,462 policies in 2006-
07 and settled 555,302 claims during the same period. Oriental’s record of settling
customer grievances satisfactorily is an impressive 94.46 %. National Consumer Week
was observed from 24.12.2006 to 30.12.2006. During 2006-07 Oriental Insurance
registered a growth of 11.39%, the highest among all public sector general insurers, for
the second year in succession.

As India’s insurance sector is fast changing, with the IRDA dismantling the tariff regime
with effect from 1st January 2007 for Fire, Engineering & Motor portfolios — allowing
insurers to freely price their products--Oriental Insurance is already prepared with its
new software system – the Integrated Non- Life Insurance Application Software. This
software will enable all offices to be interconnected through a central data center. The
software is implemented successfully in 262 offices as at 31st March 2007 and the
Company plans to achieve 100 % implementation by the end of financial year 2007-
2008. For its Investment Portfolio, Company has procured a SAP based module which
provides integrated approach to management of investments. We have a Reinsurance
accounts module based on Unix / Unify platform which has been running successfully for
the past 15 years. To arm its officers with the skills critical in a free pricing system,
Oriental has imparted rigorous training. To ensure that relationships with its customers
are built and strengthened Oriental has put in place an efficient grievance mechanism at
every level. Expansion of Oriental’s reach has been made possible by using more
platforms. Towards this end, it has tied up with various scheduled banks like Dena Bank,
Oriental Bank of Commerce, Indusind Bank. It is also using the nationwide network of
post offices to reach more people.

RESULTS 2006-07

The Company’s Gross Direct Premium Income in India during the year 2006-07
(Audited) was Rs.3928.52 crores and the Premium Income outside India was Rs.92.26
crores. The Gross Direct Premium in India & abroad showed a growth of 11.39%. The
Net Premium Income (Domestic and Foreign), on the other hand grew by 15.17% from
Rs. 2500.46 crores in 2005-06 to Rs. 2879.74 crores in 2006-07. The company’s
operations in Nepal, Dubai and Kuwait yielded a Gross Direct Premium of Rs. 92.26
crores during the year 2006-07 as against Rs. 82.66 crores during the previous year.
The net premium on foreign operations stood at Rs. 86.77 crores and as against this, the
Net Incurred Claims during this year in respect of foreign operations were
Rs.36.96 crores at 42.60%. The foreign operations have resulted in an overall surplus of
Rs.19.06crores.

After taking into account the income from Interest, Dividend & Rent of Rs. 560.08 crores
and Profit on sale of Investments of Rs. 600.01, we have posted a pre-tax profit of Rs.
629.64 crores & post-tax profit of Rs. 497.27 crores for the year 2006-07. The Company
had a documents issuance ratio of more than 98% during the year, having issued 99.24
lacs documents approximately. The claims disposal ratio for non-suit claims settlement
ratio was 86.82%.

RATINGS

The company’s financial health is evident in the fact that CRISIL has consistently, for
many years, given the company a “AAA” rating. ICRA – an Associate of Moody’s
Investor Service – has also rated Oriental as iAAA, indicating the highest claim-paying
ability. This rating also reflects the company’s strong liquidity position. For two years in
succession, Company has also got financial strength rating of “B++(Good)” and
issuer credit rating (ICR) of “bbb+” since 2006 from A.M.Best, UK. The solvency
ratio of the company as on March 31, 2007 was a very healthy 2.17 times.

AWARDS

Our Company has been voted “Consumer Superbrand 2006-07” status by the
independent Superbrands Council for the second year in succession. The Company had
been awarded the prestigious International Marine Insurance award of Lloyds list
2006 for rendering exceptional professional services at a colorful ceremony held in
Dubai. Our CMD Shri M.Ramadoss was recently adjudged as the Best CA
Professional Manager in Public Sector companies by The Institute of Chartered
Accountants of India. The Company made its presence felt in IT world when Shri
S.K.Chanana, GM (IT) was awarded CIOL (Extended Manager) award for the year
2007. The Company was ranked 3rd by “Business Today” for its top visibility and
image score in General Insurance category. The Company was also honored by the
Central Excise & Service tax Department as one of the highest tax payers in India.

CORPORATE MISSION

To contribute to the socio economic objectives of the nation by being a vibrant and
viable organization catering to the growing insurance needs of the community. Towards
this end we will strife for management of business operations.

CORPORATE OBJECTIVES

¾ To serve better the insurance needs of the entire community, keeping

CUSTOMER as the focus.
¾ To strengthen our tradition of being CUSTOMER-FRIENDLY, in order to provide
quality service.
¾ To manage Business profitably, manage funds judiciously and deploy investible
funds for optimum yield.
¾ To optimize the retention of Indian business and conduct reinsurance and
international operations in the best interest of the country.
¾ To work towards minimization of losses and develop Risk Management
Technologies.
¾ To function as a strong and dynamic non-life insurer

NEW CORPORATE VISION

WE ORIENTAL WILL:
• Be a financially strong leader in industry both in market share and profits; brand
image being synonymous with general insurance.
• Be a recognized for best in class customer service with transparent and ethical
practices.
• Be an innovative company with latest technology enablement and having full
range of empowered distribution channels.
• Be a public listed company; continuously creating value for its employees and
shareholders.
 • Be a top employer with highest employee productivity and progressive HR
policies.
• Be a company with a core value system based on trust, integrity and
performance culture.
•

PARTICULARS OF ORGANISATION
DATE OF INCORPORATION 12TH September 1947
MODE OF INCORPORATION Incorporated as a Public Limited company
under the Indian Companies Act, VII of
1913
ADMINISTRATIVE MINISTRY Ministry of Finance
PRESENT STATUS A Government company within the
meaning of Sec. 617 of the Companies
act, 1956
SHRE CAPITAL:
AUTHORISED Rs. 200 Crores
ISSUED AND SUBSCRIBED Rs. 100 Crores
PRESENT SHAREHOLDING President of India (100%)

FUNCTIONS AND DUTIES

The Oriental Insurance Company Limited carries out its functions and duties in
accordance with the objectives defined in its Memorandum & Articles of Association and
the guidelines laid in Insurance act 1938, General Insurance (Nationalization) Act 1972
(since amended in 2002) and IRDA Act 1999.