Timing, it is said, is crucial for investors in the stock markets as it is for batsmen in the game of cricket. This may hold true even for companies approaching the capital markets.

As India’s largest private life insurer ICICI Prudential Life Insurance Company Ltd (ICICI Pru Life) marches towards a listing on bourses this year, BusinessLine caught up with Sandeep Batra, Executive Director, ICICI Pru Life, to discuss life insurance trends, company’s performance and the way forward.

The company is eyeing a listing at a time when global investor interest in India remains strong and domestic investors too are keeping their faith on financial assets. Excerpts:

ICICI Pru Life has filed the DRHP (draft prospectus) with SEBI. When does one expect the issue to hit the market?

We filed DRHP in mid-July this year and are awaiting approval from the capital market regulator.

We are hopeful for a listing soon.

ICICI Bank, the main promoter, too is coming out with an offer for sale. Does that mean you will not get any capital funds through the proposed offering?

Yes, we have a solvency ratio of 320 per cent against the IRDAI mandated 150 per cent, this means we are very well capitalised.

This is an Offer for Sale being made by ICICI Bank wherein the equity stake of the bank will come down to 55 per cent from the current 68 per cent.

Is there any benefit at all for you from the proposed listing?

Yes, it will raise the profile of ICICI Pru Life in the eyes of all stakeholders, including customers and investors.

There is clear advantage. It opens up the opportunity for us to raise capital in the future. The intent to list was always there.

The raising of the FDI cap from 26 per cent to 49 per cent facilitated this offering.

So, what about your capital needs to fund business growth?

The last tranche of capital infusion by the promoters was done in 2009.

The company has been declaring profits since fiscal 2010 and paying dividends since fiscal 2012.

So, no capital raising from you this fiscal?

Certainly not, this fiscal.

What about medium- to long-term?

With a capital adequacy of 320 per cent, we are confident that we will be able to meet our near term capital requirements through internal accruals.

However, in case we do need to raise capital, we will evaluate all the options available, including subordinated debt.

You have had a fantastic run in the last three-four years, clocking total premium income of ₹19,000 crore for year ended March 2016? What has been to your biggest growth driver?

Our focus on digitisation since 2012 and implementation of various customer-centric initiatives have worked very well for us.

Technology has enabled us to efficiently deliver products and services.

The assisted sale model (using tablets) as part of our digitisation strategy has transformed the tablets into virtual branches.

Today, 90 per cent of new business premium (retail) comes in through the digital platform. Our agents today can issue a policy in a day, whereas earlier it took weeks and maybe even months.

Approximately 51.9 per cent of our renewal premiums came in electronically.

More importantly, it has enabled us to deliver superior service to customers.

Digitisation has facilitated need-based selling and this has led to us achieving one of the industry’s best persistency levels. Our 13th and 49th month persistency stood at 82.4 per cent and 62.2 per cent respectively.

Which are the areas where there could be growth for you?

We see lot of potential in the area of protection business. Last year, our protection business premiums grew 83 per cent.

A Swiss Re report has highlighted that the protection gap in India was about $ 8.5 trillion!

It is the protection business where the real potential is.

So our focus will be on growing the share of pure protection products.

However, this does not mean that we will go slow on the long-term savings category. It is not a case of either one but both Protection and Savings.

Today, how are you placed on product mix front? How much is ULIPs?

ULIPs are cost-effective products and today ULIPs constitute 80 per cent of our product portfolio. It’s not that we have been pushing ULIPs but only responding to customer demands.

Additionally, 92 per cent of our funds have beaten their respective benchmarks since inception. In last five years, our overall market share in life insurance sector had grown from 5.9 per cent to 11.3 per cent.

So coming to valuation from an investor’s perspective. Should I look at ICICI Pru Life purely from the metric of embedded value?

EV is a very important metrics but not the only one.

Our value of new business has registered a growth of 53 per cent in fiscal 2016 and profit after tax has grown to ₹1,653 crore in fiscal 2016 from ₹1,386 crore in fisca1 2012.

Additionally, our return on equity has exceeded 30 per cent for each year since fiscal 2012.

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