Mumbai: HDFC Standard Life Insurance Co expects to break even by 2011-12 as it aims to bring down operating expense ratio to about 20% in the current financial year, a top official said on Monday.
“It will take us two more years to break even,” Paresh Parasnis, principal officer and executive director at the life insurance company, said.
The firm is a joint venture between Housing Development Finance Corp, India’s top mortgage lender, and UK’s Standard Life Group.
Its current operating expense ratio stood at 29%. “We are rationalising costs and increasing efficiencies. We won’t open any more branches this year,” Parasnis said.
The insurer presently has 575 branches in India.
It expects its premiums to rise 10-15% in the year to March 2010 as it sees business rising in the second half of the financial year, the official said.
Its total premium in 2008-09 was Rs55.65 billion. This included the new business premium of Rs25.52 billion with the rest coming from renewal premiums.
Parasnis said the firm may require Rs3 billion of additional capital from founders in the current fiscal if the current growth rate continues.
HDFC Standard Life, which has completed 9 years of operations, has a paid-up capital of Rs18.46 billion.
Life insurance penetration in India is about 4% of GDP, in terms of total premiums underwritten in a year, compared with 2.4% in China and about 13.5% in the UK.
India’s current laws cap foreign investment in insurance at 26% and prevents insurers from entering the stock market in the first 10 years of their operations in the country.
India’s parliament is considering a law to raise the foreign-investment limit to 49%.