What is your business focus ?
We are mainly a retail player and intend to maintain our corporate business at around 15% to 20% of the book. In future, we will continue to be focused on retail products across the motor and health family. We currently look at the corporate business selectively.
This year for the first half, we have grown by 65.8 per cent in terms of total premium, with a business volume of around Rs 400 crore. This is against a growth of 32.5% achieved for the year ended March 31, 2018.
We aspire to touch Rs 1000 crore premium mark by the end of the fiscal.
In terms of operating parameters, as at March 31, 2018, we are ranked number 3 in the industry, in terms of the fastest claim settlement turnaround time for motor OD claims and ranked number 4 in the industry, in terms of least number of customer complaints per 10,000 policies.
Our solvency margin as on September 30, 2018 is at 1.67.
Which are your top three portfolios?
Motor insurance dominates our portfolio and comprises 78 per cent of our premium, followed by corporate business which is 18 per cent of the business, within which the fire portfolio contributes 12% and the balance 4 per cent is health and accident.
Within motor we are well diversified across different vehicle categories and an even geographical spread of business. We are concentratingon growing our health and accident portfolio.
Are you a profitable company or when do you think you can break even?
We have been in profits in the last 2 years. We generated a profit of Rs 6.3 crore in 2017 and Rs 4.9 crore in 2018. During the six month period September 30, 2018, we generated a profit of Rs 11.2 crore as compared to Rs 2.6 crore during the same period last year.
Magma HDI is currently in its 6th full year of operations. We started the company with an Equity of Rs 208 crore and have had one infusion of Rs 50 crore taking our total capital at Rs 258 crore.
As at September 30, 2018 the total accumulated losses are only to the tune of Rs16 crore. This compares extremely favourably with some industry peers who have taken far longer to become profitable and also had higher level of capital burn.
The company’s combined ratio (CR) has already come down to 120.2 per cent as on 31 March 2018 from 123.2 per cent a year ago. For the six month period ended September 30, 2018, our CR has come down further to 117.5 per cent (normalized) as compared to 125.1 per cent in H1 of last year. We are expecting this trend of improvement in the CR to continue as we grow in scale and size.
What are the categories you have or plan to raise prices?
Pricing is a function of the market forces within which we operate. We constantly look at our cost structures to ensure that we remain competitive in our price and service offerings.
What are your synergies with Magma?
Magma has a wide national presence through 300 plus own branches and relationship with over 2.4 million customers. Magma HDI leverages on the geographical reach and the existing customer relationships of Magma. Magma currently drives around 20% of the Magma HDI business.
What kind of premium you earn from rural areas?
General insurance penetration in the rural areas is low. However, we are rewriting the rural story. As at September 30, 2018 about 60% of our business is generated from rural areas. This trend is likely to continue even in the future as we increase our market share further.
What kind of products you sell in these areas?
The dominant product we sell in rural areas is motor. We also sell home, health, accident insurance and workmen compensation.
Have you participated PMFBY and Ayushman Bharat?
We have consciously stayed away from the crop insurance business. We apply seven parameters while weighing out the feasibilities of any business. We find that crop insurance is volatile in business generation, profitability and capital requirements. We believe that we need to have a certain scale and size before venturing into businesses such as crop insurance.
We have entered the health insurance segment by launching a retail health product One-Health in October last year. We are also present in critical illness and personal accident segment. We currently do not qualify under the set parameters of the GovernmentsAyushman Bharat.
What kind of agents do you have?
The agents play an essential role in sourcing the business in General Insurance. Accordingly we have been increasing our agent base over the years. Currently we have nearly 4000 retail and POS agents and 6 corporate agents. This count is expected to cross the 5000 mark next financial year. They are professionally qualified and trained in products.
The agency channel contributes 47 per cent of the company business, whereas the balance comes from channels like Banca+OEM (15 per cent), Corporate agency (20 per cent) and Corporate sales & broking (18 per cent). The Corporate Agency business reflects the business we generate from our parent company, Magma.
As on September 30, 2018, we have a bouquet of 57 products. With presence in 18 States and 3 Union Territories and 132 branches covering 122 districts.
What are your expansion and capital infusion plans?
The Indian general insurance markets presents a unique growth opportunity given the current level of under penetration. We shall be part of this growth story. Given our current scale of operations, we believe that we will continue to out-grow the industry growth rates. We will raise commensurate capital to support this growth objective.
How much HDI hold in JV?
HDI Global SE has a shareholding of 26% in Magma HDI General Insurance Company Limited.
Why the foreign partner has not increased its stake to 49%? There were speculations that the foreign partner wants to exit the JV, your comment?
It is our company policy not to comment on market rumors or speculation.
What is your relationship with GIC Re? Do you think the new foreign reinsurers in India are helping you to design products?
GIC Re is the leader on our conventional treaties and is the largest capacity provider to us. We enjoy excellent relationship with them and they support us on various reinsurance programs that we have as a Company.
With the establishment of Branches by the foreign reinsurers, we have started seeing higher engagement by them. However, a reinsurer which stands out and is bringing new reinsurance solutions to the Indian market is Munich Re.
What is your take on the proposed merger of three PSU general insurers and its impact on players like you?
The manner in which the Integration of IT and HR will be managed in the ongoing merger of the three state-run general insurers will determine if it opens up an opportunity for the private sector players and New India. The three state-run general insurers which are to be merged may also require capital infusion to maintain healthy solvency margins.