Interview | Will make a serious attempt to look at inorganic growth options now, says Ageas Federal Life Insurance CEO Vighnesh Shahane

Vighnesh Shahane, MD and CEO, Ageas Federal Life Insurance.

On May 2, Ageas Federal Life Insurance posted a net profit of Rs 94 crore. According to the company, this is the 10th consecutive year of profit in its operations in India. Despite facing various challenges due to the continuing pandemic, Ageas Federal’s total premium rose by 13 percent to Rs 2,207 crore in FY 2021-22 from Rs 1,959 crore in FY2020-21. The growth was driven by a 27 percent rise in individual new business premium to Rs 639 crore and 5 percent rise in renewal premium to Rs 1,391 crore.

In an exclusive interview with Moneycontrol on May 2, Ageas Federal Life Insurance Managing Director and CEO Vighnesh Shahane spoke about a range of issues including the recent stake sale by IDBI to Ageas and inorganic growth options in the Indian market. Edited excerpts:

How did the pandemic impact your business?

I think the two years of the pandemic have been a tough period for all of us in the industry. This is not only personally for employees but also professionally from a business standpoint. There was a dip in the new business premium. There was a dip in renewal premium because of pay cuts and job losses in the first year.

How IDBI leaving the JV impacted you?

IDBI at its peak used to do 50 percent of our topline business. Federal Bank used to do approximately 30 percent. With the exit, IDBI contribution became almost zero and that impacted the topline of the company. However, in this period, Federal Bank grew by 40 percent y-o-y on topline. However, that was not enough to compensate for the loss of IDBI as a distribution partner. An ambitious increase of 35-40 percent is expected over the next two-three years for the topline.

What category of customers are your new customers?

The new category of customers is affluent NRI customers in the Federal Bank data base. We get a lot of business from these customers primarily from the Middle East. A lot of large ticket business comes from them. This is the segment that has contributed heavily over the last two years and augmented our topline.

What is the highlight of your financial results this time?

We have declared 10 consecutive years of profit. This is a very credible performance despite IDBI pulling out and COVID impact during the last two years. Total premium rose by 13 percent to Rs 2,207 crore in FY 2021-22 from Rs 1,959 crore in FY2020-21. The growth was driven by a 27 percent rise in individual new business premium to Rs 639 crore and 5 percent rise in renewal premium to Rs 1,391 crore.

What is your business outlook?

The outlook is very bullish. The period of uncertainty is over. The proposal to increase Ageas stake in the company to 74 percent is pending with the regulator. So, I think we should be the first company where the foreign partner stake goes up to 74 percent if the regulator allows. The stake is already at 49 percent.

When do you expect the approval to come?

The proposal is with the regulator at this point of time and we are hopeful that it should culminate in the next three to four months.

What is the significance of this development?

One significance is that the uncertainty around the company is over. The uncertainty that clouded the company when IDBI wanted to pull out and they did pull out. Secondly, this shows there is a strong commitment to the Indian business. Also, we get a lot of domain knowledge, domain capital from the foreign partner to enhance our proprietary channels of business, and the focus on digitalisation and IT.

What are the other expansion plans? Are you looking at inorganic options to grow in India?

Yes, absolutely. While we are growing our proprietary channels, we will also look at leveraging the open architecture framework that allows for banks to have three insurance partners. There is very strong sentiment to grow our banking partners, especially with the exit of IDBI. It’s not easy to get a bank JV partner. Most of the banks have JVs already. So there are also options for growth through inorganic channels. We have been open for inorganic options for a few years. Now we will make a serious attempt.

Anything on the radar?

Unfortunately not, even though we have been meeting a lot of people. These things take time.