September 24, 2021

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Ageas Federal Life Insurance expects 35-40pc premium growth in FY22

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Ageas Federal Life Insurance Company expects a 35-40 per cent growth in premium income in the current financial year despite higher claim payouts in the first quarter, a top company official said. The company looks to keep the momentum going after better-than expected performance in Covid-19-hit 2020-21 fiscal, Ageas Federal Life Insurance Company Managing Director and CEO Vighnesh Shahane said.

“I think FY21 has been far better-than-expected. When the lockdown was announced last year, we didn’t know exactly how long it would last, what implications it would have. Our expectations were very muted in terms of new business, persistency, and claims etc.

“But in the first wave of the pandemic, none of these played out. Our persistency was as good or better than normal. We achieved business above our target despite the three months of lockdown. Our claims also were reined in, these were not too high last year,” Shahane told in an interview.

The insurer recorded the ninth consecutive year of profit in FY21, as per its annual report 2020-21. It also declared a dividend of 13 per cent during fiscal ended in March 2021. The net profit during 2020-21 stood at Rs 119 crore.

“For the current fiscal year, we are looking at a growth of about 35-40 per cent in our premium over the last year,” said the official.

On asked what gives him the confidence to project this kind of growth, he said: “As we speak, we have a 100 per cent growth in our premium and I am fairly confident that we will be possibly able to achieve 40 per cent (growth), unless the only uncertainty is how this Covid (thing) plays out. In case things improve from here on, then I think we should achieve our projected growth number,” Shahane said.

However, the claims paid by the insurer during the first quarter of this fiscal has risen substantially from a year ago due to the second wave of the pandemic.

“This year, the first three months only, we have about Rs 45 crore in terms of claims settlement. So our claims might weigh, if this trend goes again till the end of the year,” he said.

Ageas Federal Life Insurance had gross claims settlement of Rs 116 crore and expects an increase of around 2-2.5 times this year on a gross basis. In 2020-21, Covid-related claims contributed to 25 per cent of its overall claims.

In a significant development, the company was also rebranded as Ageas Federal Life Insurance Ltd during FY21 from IDBI Federal Life Insurance Co Ltd.

The foreign partner Ageas Insurance International NV increased its stake to 49 per cent by acquiring a 23 per cent stake from IDBI Bank, a development post IDBI Bank becoming an LIC-controlled bank.

While

holds 26 per cent stake in the company, the stake of IDBI Bank has come down to 25 per. Founded in 2007, the three-way joint venture insurance company commenced its operations in 2008.

Shahane said the business from IDBI Bank channel has almost dried up but Federal Bank remains a major contributor.

“The quantum of business from IDBI (Bank) has almost become zero, because they are selling LIC policies now. Even if they (IDBI Bank) have 25 per cent stake in the company, they are not doing any business for us, that is pretty clear,” the official said.

With the government allowing up to 74 per cent foreign direct investment in the insurance sector, he said: “Now FDI limit being hiked to 74 per cent, we have to wait and see if Ageas will pick up the other 25 per cent (from IDBI Bank). The sentiment is pretty positive, but we will have to see.”

However, there has been no impact on the business, he added.

“Our business continues to be robust and that is thanks to Federal Bank that contributes about 90 per cent of our business at this point of the time. They are doing extremely well,” he added.

On forging more tie-ups to sell policies, he said the company is looking to bring on board more of regional rural banks (RRBs) as well as NBFCs, besides third party sources.

Company’s total premium grew by 6 per cent in FY21. The individual new business premium grew by 24 per cent, while the renewal premium showed a rise of 4 per cent, according to the annual report FY21.

The assets under management grew by 24 per cent to Rs 12,011 crore.

It issued 14.46 lakh policies during the year, wherein the new business sum assured stood at Rs 9,437 crore and total sum assured was worth Rs 1.08 lakh crore.

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