(L to R) Anuj Mathur,MD and CEO, Canara HSBC Life Insurance,L V Prabhakar,MD & CEO, Canara Bank,Hitendra Dave, CEO,.HSBC India at a media meet in Mumbai
Mumbai:
Public sector lender Canara Bank may look at diluting its stake in Canara HSBC Life Insurance at a time when the valuation of the life insurer will be attractive, its chairman L V Prabhakar said on Wednesday.
The life insurance company is a joint venture between Canara Bank, HSBC Insurance (Asia Pacific) Holdings Ltd and Punjab National Bank (PNB). While Canara Bank holds 51 per cent stake in the company, HSBC and PNB’s stake is at 26 per cent and 23 per cent, respectively.
”Canara Bank sees a lot of potential in its subsidiaries. As on date, the bank is very strong. With this strength and the strength of its subsidiaries, we want to have synergies wherein the subsidiaries will also have huge valuation going forward.
”We are waiting for an appropriate time when valuation is very attractive and then the bank will take a call on diluting its stake either to HSBC or to anyone else,” Prabhakar, who is also the Chairman of Canara HSBC Life, told reporters.
Another option for diluting stake in the bank’s subsidiaries will be through Initial Public Offering (IPO), he said.
With a new logo,the life insurer on Wednesday rebranded itself to Canara HSBC Life Insurance from earlier Canara HSBC Oriental Bank of Commerce Life Insurance.
Erstwhile lenders — Oriental Bank of Commerce and United Bank of India were amalgamated with PNB in 2020.
In February this year, PNB informed exchanges that HSBC Insurance (Asia Pacific) Holdings Ltd had expressed its intention to acquire the bank’s stake in the joint venture.
Prabhakar said so far PNB has not diluted its 23 per cent stake in the life insurer and it is a work-in-progress.
PNB also holds a 30 per cent stake in another life insurance joint venture — PNB MetLife Insurance.
As per the Insurance Regulatory and Development Authority (IRDAI) regulation, a bank cannot hold more than 10 per cent stake in two life insurance companies simultaneously.
Prabhakar said he expects business of the life insurer to double in the coming two years.
Canara HSBC Life Insurance Managing Director and CEO Anuj Mathur said the individual new business premium income grew by 32 per cent to Rs 1,375 crore in fiscal 2021-22 as against Rs 1,045 crore in the year-ago period.
”In the last 7 years, we have grown by almost 24 per cent whereas the industry has grown by 12 per cent. So we will continue to outperform the industry. Last year also we registered 32 per cent growth in our new business premium whereas the industry grew by 15 per cent,” Mathur said.
The company clocked a net profit of Rs 10 crore after the claim payouts in FY22. It had paid claims worth Rs 500 crore on account of the second wave of COVID-19.
As of March 31, 2022, its embedded value was at Rs 3,848 crore.
The embedded value is a measure of the consolidated value of shareholders’ interest in the life insurance business.
Mathur said currently 12 per cent of its business comes from non-bancassurance channels and 88 per cent from bancassurance channel.
Going forward, the company will focus more on other channels for distribution of its products, Mathur said.
“The new logo is based on the Company’s strong parentage, technology, and people – the three pillars that have helped it become what it is today. Our new campaign #PromisesKaPartner serves as a reminder and nudge to Indians to rethink their aspirations, as well as a promise from us to stand by our customers and assist them in keeping their promises. We will continue to look ahead as an organization and strengthen the strong brand while ensuring the new identity compliments our innovative offerings, digital distribution, and improved customer servicing,” added, Tarannum Hasib, chief distribution officer, Canara HSBC Life Insurance.