The Hindu Business Line : Kotak Mahindra Life targets growth of 100% in new biz premium

In the first nine months of the fiscal, the company has raked in new business premium of Rs 560 crore (in terms of annualised premium equivalent where single premium is given only 10 per cent weightage), which is a growth of 80 per cent against the previous year.

The company has reported a net loss of Rs 67 crore in the first nine months of the fiscal.

“We hope to end the year with new business premium of Rs 1,100 crore. We plan to grow at 100 per cent next year also,” said Mr Gaurang Shah, Managing Director, Kotak Mahindra Life Insurance.

The high growth implies that the company may not break-even in the immediate future. “If the company has to break-even, then growth would have to be stalled at 25 per cent and we would have to stop expanding and sell only through our existing branches,” Mr Shah said.

High-growth phase

Kotak Mahindra Life Insurance sees the next few years as a high growth phase for the insurance industry since the economy is growing so rapidly and life insurance premium as a proportion of the Gross Domestic Product is expected to rise from 3.7 per cent to 5.75 per cent in 2012.

The company has a branch network of 110, which it plans to expand to 140-150 by the end of the fiscal. Most of the new branches will be set up in Tier II and Tier III cities.

Kotak Mahindra Bank also plans to increase its branch network from 150 to 250 in the calendar year of 2008. “We could potentially have around 500 outlets to sell insurance by March 2009. Around 25 per cent of our business comes from Kotak Mahindra Bank,” he said.

Agency force

The company’s agency force of 30,000 will be increased to 35,000 during the same period. Unit Linked Insurance Plans account for the bulk of the company’s business and the average ticket size per policy is high at Rs 30,000.

Kotak Mahindra Life’s assets under management stand at Rs 3,000 crore. On Friday, it launched a plan called ‘Kotak Smart Advantage’, which offers 100 per cent premium allocation from the second year onwards, and guaranteed returns on the first year premium.