The Hindu Business Line : Max NY in talks with banks to enhance distribution channel

Some of the options proposed included participating in the equity of MYNL's Indian operations or MYNL picking up an equity in a bank or floating a joint venture for life insurance distribution business.

Bangalore , May 25

MAX New York Life Insurance Company Ltd (MNYL) has initiated talks with a clutch of banks for picking up a stake in a bid to build up a sustainable distribution network.

Mr Anuroop Tony Singh, Chief Executive Officer and Managing Director of MYNL, declined to identify the banks, though they are believed to be large private sector entities. "We have not discussed any numbers or the modalities so far. We need equity participation."

He was speaking to reporters here today. Some of the options proposed included participating in the equity of MYNL's Indian operations or MYNL picking up an equity in a bank or floating a joint venture for life insurance distribution business in the country.

The entire process has acquired an element of urgency, Mr Singh said since MYNL intended getting a large share in the rural markets, which are currently underinsured. Bancassurance would be one of the major vehicles for its rural foray, he said. However, he added, "Unless there is an equity stake there will not be commitments." Currently, the rural market focus of MYNL was confined to Punjab.

To support the growth thrust, he said, MYNL intended pushing up the capitalisation of the company to Rs 650 crore from the current level of Rs 346 crore. The joint venture partners have agreed to bring in the additional capital required, he added. MYNL is promoted by Max India Ltd and New York Life on a 74:26 basis.

The capital increase would take place at the rate of Rs 100 crore per year, since the company has targeted a business growth of 50 per cent per annum. This growth momentum he said would allow the company to have a positive bottomline by 2008. The company, he said, was also keen to participate in the pension funds business and was accordingly waiting for the Government guidelines.

MYNL, Mr Singh said, last year had managed to generate a premium income of Rs 212 crore, up from the Rs 97 crore in 2002-03. During the same period, the sum assured also went up to Rs 11,238 crore, up from Rs 5,420 crore.

During the same period, MYNL sold 2,85,000 policies. The growth came from the savings-linked insurance covers. Since inception, MYNL has managed retention of 85 per cent of the policyholders, he said. Most of these policyholders were individuals.

The group insurance business accounted for only about 5 per cent, he added.