The Hindu Business Line : Bajaj Allianz posts Rs 54-cr profit

Mumbai May 11 Bajaj Allianz Life Insurance Company has reported a net profit of Rs 54 crore for 2006-07 against a loss of around Rs 40 crore in 2005-06.

"We were able to make a profit as we slowed down the growth of new business premium, kept expenses low and introduced products that were more capital efficient and more profit built into them. We hope to double our profits in the current year," said Mr Sam Ghosh, CEO, Bajaj Allianz Life Insurance.

The company registered a growth of 57 per cent in its new business premium at Rs 4,270 crore against Rs 2,717 crore in the previous year which is lower than other insurance companies such as LIC and ICICI Prudential which have grown by more than 100 per cent in the last financial year.

Mr Ghosh said reducing the contribution of single premium policies to 20 per cent from 55 per cent in the previous year, also helped in making a profit for the first time. Regular premium policies require lesser amount of premium to be allocated for commission and other reserve requirements.

"We have also been able to keep our expenses low as 65 per cent of our business comes from smaller towns. We do not spend too much on advertising either last year the budget was just Rs 12 crore," said Mr Ghosh.

Bajaj Allianz Life also plans to double its agency force to 4 lakh from the existing 2 lakh. The company will also add around 230 branches to its existing network of 870 offices in 840 towns, Mr Ghosh said.

Capital base

The company has a capital base of Rs 700 crore, which could go up by around Rs 150 crore this fiscal.

Most life insurance companies make losses in the first few years owing to customer acquisition costs as well as provisions for actuarial liabilities and solvency requirements.

SBI Life Insurance was the first company to report a profit of Rs 2.02 crore in 2005-06 and Rs 3.83 crore in 2006-07.

Bajaj Allianz Life's close competitor, ICICI Prudential Life Insurance, saw a jump in its net loss to Rs 649 crore in the fiscal ended March 31, 2007 against Rs 187 crore in the previous year.

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