Canara Bank HSBC OBC Life Insurance Company (CHOICe) expects to wipe out its accumulated loss of ₹250 crore in fiscal 2018-19 and declare its maiden dividend in FY 2019-20 on the back of robust growth in business.

According to Anuj Mathur, Chief Executive Officer. CHOICe: “We are profitable since 2013. Year-on-year we are making profits in excess of ₹100 crore. But we had some accumulated losses in the first five years (of operations).

“So, those losses will get wiped out completely in the coming financial year. If everything is on track, we will declare our maiden dividend in FY20.”

CHOICe, which was incorporated in 2007, is a joint venture of Canara Bank (51 per cent stake), HSBC Insurance (Asia Pacific) Holdings (26 per cent) and Oriental Bank of Commerce (23 per cent). It operates exclusively on the bancassurance model.

On public sector banks facing constraints in infusing capital in subsidiaries due to high provisioning towards bad loans, Mathur said: “We have reached our peak capital requirement. We don’t need fresh capital. Our solvency is 400 per cent against the regulatory minimum of 150 per cent. So, we can fund all our future growth from internal accruals.”

To garner more business

The life insurer is looking to further leverage the combined network of over 9,000 branches and nine crore plus customers of Canara Bank and OBC to garner more business.

“Our current penetration in Canara Bank and OBC is less than half a per cent. Together, these banks have about nine crore customers. Out of this, our customer base is only 4.5 lakh. So, next year we would like to increase our penetration from 0.5 per cent to 1 per cent, thereby doubling our customer base to nine lakh,” said the CHOICe chief.

In the next five years, if the company ups the penetration to 4-5 per cent that would effectively mean having a customer base of 30-35 lakh, he added.

In view of the base effect kicking in, CHOICe will target 35 per cent growth in new business from FY19 onwards against expected growth of about 50 per cent in the current financial year.

The private sector life insurer is likely to end FY18 with a new business premium of about ₹1,000 crore against ₹630 crore in the preceding year.

“In the existing business, we are ensuring that the persistency remains at 80 per cent. If this falls, then there is a hole in the bucket…

“If we are able to grow better than the industry — if industry is growing at 20 per cent and we are growing at 35 per cent — then automatically our market share will increase,” said Mathur.