The Hindu Business Line : ICICI Pru may take more time to post profits

Taking time
The company did not envisage spreading to 254 cities and towns.
Customer response has been highly encouraging in tier-II cities.
The company aims to bring down the expenses ratio to single digit.

Hyderabad , Aug. 25

Despite being at the top in the Indian private sector life insurance industry for the past five years, ICICI Prudential Life Insurance is unlikely to earn profit in the next couple of years.

Against the originally envisaged period of six to eight years for posting profits, the company is likely to take more time to do so, according to its Executive Vice-President, Mr Sandeep Batra.

"We may take few more years to declare profits," he told reporters while replying to a query.

Reasons for delay

Explaining the reasons for the delay in turning profitable, Mr Batra said the company's business growth was phenomenal and far ahead of all expectations.

"It may sound astonishing that high and fast growth in business delays a company becoming profitable. But this is typical to insurance industry.

"There has been a phenomenal growth in our business with funds under management crossing Rs 10,000-crore mark and sum assured touching Rs 55,000 crore in just six years of operations. This has forced us to pump in substantial investments with the capital base reaching a high of Rs 1,335 crore," he said.

According to him, the company did not envisage spreading to 254 cities and towns across the country with over 300 branches, 83,000 advisors, 19 bancassurance partners and over 200 corporate agents and broker tie-ups within the first six years of its operations.

Mr Batra said that the more than expected growth in business and consequential high investments would also result in increased profits, far above the envisaged amounts.

Expenses ratio

Stating that the company could successfully bring down the expenses ratio to 14 per cent during the fiscal ended March 2006 from 17 per cent in the previous fiscal, he said it has set a target of bringing the expenses ratio further down to single digit level in the next few of years, probably couple of years.