Even as the life insurance industry is undergoing regulatory changes and companies in this space are looking to sustain business, some life insurance companies have not only seen growth in premium, but also posted profits.
HDFC Life, which posted a consolidated net profit of Rs 281.83 crore (Rs 2.81 billion) for the quarter ended June compared with Rs 11.92 crore (Rs 119.2 million) in corresponding period last year (according to HDFC’s first quarter results), has diversified its distribution mix.
Vibha Padalkar, executive director and chief financial officer, HDFC Life, said the company had been able to post higher profits, as it had concentrated on direct selling which included online policies and branch walk-ins, apart from doing business though bancassurance.
“We have only brought out products that the market needs. Therefore, it is based on market trends,” she said, adding a company made profits when a policy remained in its book for a long time.
HDFC Life, she said, has achieved the growth due to high levels of persistency.
Reliance Life Insurance posted a net profit of Rs 56 crore (Rs 560 million) for the quarter ended June, a rise of about 150 per cent compared to the year-ago period.
Anup Rau, chief executive, Reliance Life, said, “Hiring additional agents has been one of the factors behind the profitable growth.
“Agent productivity has been a key focus area. Increasing agent productivity has contributed to a healthy first quarter and helped us improve our business and ranking without the support of any big bank alliance.”
He added the company was confident of registering double-digit growth this financial year.
While some companies are still recording losses, bank-led players have been posting healthy profits.
PNB Metlife India, according to its public disclosures, posted a profit after tax of Rs 9.9 crore (Rs 99 million) for the quarter ended June, compared with the year-ago period’s profit of Rs 11.5 crore (Rs 115 million).
Managing director and country manager Rajesh Relan said for an insurance company, profitability was more the result of the health of existing business than new business.
“Our business plans from 2014-16 are being firmed up and we are looking at a healthy growth for PNB MetLife and a gain in market share.
In the previous year, when the market was down about 15 per cent (premium income), excluding group business, we grew 15 per cent.
We are focused on growing our embedded value through the long-term regular premium business.
In this segment, we expect to grow more than in the previous year,” he said.
Being a bank-led player has been an advantage for PNB Metlife. Relan said the company had expanded business by increasing its bancassurance footprint and growing its agency business profitably.
“The number of overall agents has not gone up much, but the number of productive agents has increased,” he said.
Reducing operational costs has also been a vital strategy. PNB Metlife has maintained a healthy expense ratio amid more business through bancassurance.
Relan said the company had deployed systems in all bank partner branches that helped deliver over-the-counter services to all customers.
This, he said, helped reduce overall costs substantially.
One of the largest bank-led players, ICICI Prudential Life Insurance, has digitised processes to reduce costs.
According to ICICI Bank’s first quarter results for this financial year, ICICI Prudential Life’s profit after tax for the quarter ended June was Rs 364 crore (Rs 3.64 billion), against Rs 349 crore (Rs 3.49 billion) in the year-ago period.
Executive Director Puneet Nanda said the company had extensively adopted technology.
“Technology has not only enriched the customer experience, but also enabled the company to significantly increase efficiencies.
“Providing superior customer service and involving customers at every step of the purchasing exercise through our need-based selling approach strengthens the foundation of our relationship with them,” he said.
While Nanda said complete digitisation was the key, Reliance Life’s Rau said operational costs and expense management should continue to be a focus area.
With the industry entering a new phase due to the revised traditional product guidelines, experts believe the key to growth would be sticking to long-term premium business.
Life insurers: What some of them have done right to stay profitable
HDFC Life
• Diversified distribution channel and looking at other channels like direct selling, including online insurance
• Reduced costs at all levels
• Higher levels of persistency
ICICI Prudential Life
• Digitisation of processes
• Online sales platform
• Extensive use of technology to increase efficiencies
PNB Metlife
• Use of bancassurance to channel reduce expense ratio
• Making existing agents more productive, and building a professional agency force
• Using technology to reduce costs for processes Reliance Life
• Hiring of additional agents
• Making existing agents more productive
• Reducing operational cost and management cost
