Insurance firms have been waiting for clarity on the Insurance Bill before they embark on initial public offering plans. If the government doesn’t want to increase the FDI, it should at least allow foreign institutional investors (FIIs) to invest in insurance companies, says HDFC Standard Life Insurance Company’s MD and CEO Amitabh Chaudhry in an interview to George Mathew. Excerpts:
Insurance IPO norms are out but there are no signs of any IPO. When is your IPO?
There are three things required for us to go public. First, we were waiting for IPO norms to come out. That has happened. The second issue is that we are waiting for the insurance Bill to be clarified. There are several question marks here. Will FDI in insurance go up from 26 to 49 per cent? Will FIIs be allowed to invest? Nothing is happening on this front now. Third, the new business margin. We declared a new business margin of 10.5 per cent. For us to go for an IPO, we need the new business margin to go up and growth to come back. For margin to go up, the growth has to come back. If we can sustain it, we can launch at that time and get the right valuation.
What do you want the government to do about the Bill?
The government has given various assurances in the last 10 years. If they have given some assurances they should do something about it. Clear this impasse. If the government doesn’t want to increase FDI in insurance from 26 per cent to 49 per cent, then allow FIIs to invest in insurance companies. You can keep 26 per cent FDI but allow FIIs to come and invest 10 or 15 or 25 per cent (over the cap). That will attract foreign investment.
With the economy on the downturn, will you be affected?
In this environment it becomes difficult for people to commit for an insurance product which has a five-year lock-in. I do expect growth to be anaemic. The regulator is not going to give any leeway allowing us to charge more from customers. I expect market conditions to remain tough in 2013 also.
How was the last year in terms of growth? What do you expect in the current year?
Last year’s performance was good. Our overall premium growth was 13 per cent. In the first half of the