In an interview with Moneycontrol's M Saraswathy, Bhargav Dasgupta, MD & CEO, ICICI Lombard General Insurance talks about the listing and strategies going forward.
Private general insurance player ICICI Lombard General Insurance, which will be the first non-life insurer to list on the stock exchanges, is not looking to get another joint venture partner after Fairfax sold a large portion of its stake in the firm. In an interview with Moneycontrol's M Saraswathy, Bhargav Dasgupta, MD & CEO, ICICI Lombard General Insurance talks about the listing and strategies going forward. Edited excerpts:
You will be the first non-life insurer to list on the markets? Do you see it setting a benchmark for the industry?
As a group we have always tried to set benchmarks. ICICI Prudential Life Insurance was the first to list on the life side.
There was a shareholder requirement for listing. We are following the tradition of being the first in the group on the general insurance front.
Do you see adequate investor appetite for the issue?
We have been talking to investors in roadshows. The feedback we are getting is investors are beginning to understand value in general insurance. In the past, it was under-reported, under-analysed and hence not an adequately understood sector. But we are seeing that in our IPO and the forthcoming IPOs there is a greater level of understanding being created.
However, general insurance is considered riskier especially since there have been concerns about irrational product pricing in the industry. How do you view that?
General insurance business always has risks but there are ways to manage risks. But what we are doing is reducing the volatility of our numbers and have been able to achieve diversification in products and distribution channels and there has also been a thrust on underwriting. This and a higher level of our disclosures is what the investors appreciate.
In July, the JV agreement between Fairfax Financial Holdings Limited and ICICI Bank has been terminated. Do you see a need to get another joint venture partners.
Fairfax approach to investee companies has not been very hands-on. If they like a business, they support it. As a company, they have been very excited about India and general insurance is their core business. They wanted to have 49 percent stake, but since our stated objective was to list large subsidiaries, they had to dilute their stake.
As per regulatory norms, they had to bring down their shareholding to below 10 percent. However, they have stated that they want to invest as much as they can and they currently hold just a notch below 10 percent.
However, we do not see a need for another joint venture partner and believe that we have the skills, capacity and competence to be on our own.
How will the funds raised for the IPO be used?
It is an entirely offer for sale. Our solvency is significantly higher than what is needed as per regulatory norms and hence we don’t see the need for any capital. The funds raised will be used by the shareholders (ICICI Bank).
Do you see an increased competition from upcoming players who will be an online-only insurer?
The way consumers want to experience corporates is changing. Technology and social media have a big opportunity. We have been technology through chat-bots and artificial intelligence to offer better products, services and assistance on claims.
For us, digital is not just selling policies online. I believe that incumbents like us have a better advantage and we can invest more given our scale and size.
Will your bank stay as an exclusive partner to you for selling insurance?While there is scope for open architecture as per the regulatory norms, our bank is still only tied up to us. Though we do not have any exclusivity arrangement, they are only partnered with us as of now.