‘In­dia At­tract­ing a Lot of In­vest­ments Be­cause it’s a Long-term Op­por­tu­nity’

The Economic Times - - Companies: Pursuit Of Profit - Shilpy.Sinha@ times­group.com

Hong Kong: Rapid ur­ban­iza­tion, wide pro­tec­tion gaps, and an in­crease in the in­sur­able pop­u­la­tion have com­bined to bur­nish In­dia’s al­lure for global in­sur­ers such as the AIA Group, with the ris­ing flow of in­vest­ments en­hanc­ing the valu­a­tions of lo­cal in­sur­ance busi­nesses.

“The pa­per is in short sup­ply in In­dia and that is driv­ing the val­u­a­tion,” Bill Lisle, the re­gional chief at pan-Asian in­sur­ance pow­er­house AIA, told ET. “We have seen a lot of for­eign in­vest­ment com­ing into In­dia as they see In­dia as a long-term op­por­tu­nity, which is pos­i­tive for the in­dus­try.”

Ac­cord­ing to the In­dia Brand Eq­uity Foun­da­tion (IBEF), a trust es­tab­lished by the Com­merce Min­istry, In­dia cur­rently ac­counts for less than1.5% of the world’s to­tal in­sur­ance premi­ums and about 2% of the world’s life in­sur­ance premi­ums de­spite be­ing the sec­ond-most pop­u­lous na­tion. The coun­try is the world’s 15th largest in­sur­ance mar­ket by way of pre­mium vol­ume, and its in­sur­able pop­u­la­tion is an­tic­i­pated to touch 750 mil­lion in 2020.

Life in­sur­ance is pro­jected to com­prise 35% of to­tal sav­ings by the end of this decade, as against 26% in 2009-10. In the next decade, the mar­ket size for life in­sur­ance could be as large as $160 bil­lion from less than $50 bil­lion now.

In In­dia, AIA has a joint ven­ture with the Tata Group in the life-in­sur­ance busi­ness, with AIA own­ing 49%. The com­pany has moved up the lo­cal leader board by adopt­ing a mul­ti­dis­tri­bu­tion chan­nel ap­proach and ex­pand­ing part­ner­ships by join­ing hands with large banks. It has moved away from part-time agency, and now em­ploys pro­fes­sional agents.

“That is the right way for the agency to be in In­dia,” said Lisle. “There are mil­lions of agents in In­dia who are part-time, which is not the right strat­egy. Our strat­egy in In­dia is to run a pre­mier agency, as it is in the rest of Asia.”

Tata AIA is prof­itable in In­dia for the last seven years. It was ranked sixth on the ba­sis of in­di­vid­ual first year pre­mium ad­justed at the end of March 31, 2017.

“Mar­ket share does not nec­es­sar­ily mean prof­itabil­ity for share­hold­ers and for the com­pany,” said Lisle. “Since our IPO in 2010, we are ex­tremely dis­ci­plined about the busi-

ac­counts for less than

of the world’s to­tal in­sur­ance premi­ums of the world’s life in­sur­ance premi­ums

ness we write. We look at VNB and not APE. We don’t chase topline, hence we are not the top writer of unit-linked in­sur­ance plans. The high­est mar­ket share is not equal to the high­est prof­itabil­ity.”

Ng Keng Hooi, group chief ex­ec­u­tive and pres­i­dent AIA Group, said that he has no plans to list the In­dian life in­sur­ance com­pany. “Every­where we op­er­ate in, we own as much as we can,” Ng Keng Hooi said. “We have no need to list. Peo­ple who list are some­times look­ing for cap­i­tal. We have no need to go to the mar­ket for cap­i­tal in In­dia. As far as AIA in In­dia is con­sid­ered there is no need for mar­kets to be listed.” In­dia has re­cently seen lo­cal list­ings by ICICI Pru­den­tial Life In­sur­ance and SBI Life. Ng Keng Hooi said that In­dia is a tough mar­ket. “The level of in­sur­ance pro­tec­tion is still very low and it is a grow­ing econ­omy,” he said. “There are reg­u­la­tions in terms of prod­ucts, in terms of what peo­ple do, (and) there are lim­its on the num­ber of prod­ucts com­pa­nies can launch. All those things are con­straints for busi­nesses.”

(This cor­re­spon­dent trav­elled to Hong Kong at the in­vi­ta­tion of the AIA Group)


Newspapers in English

Newspapers from India

© PressReader. All rights reserved.