Money & Banking

Keen to leverage Federal Bank’snetwork, says IDBI Federal CEO

KR Srivats New Delhi | Updated on February 21, 2020 Published on February 21, 2020

Will look at roping in a bank partner to improve distribution footprint, says Vighnesh Shahane

With its back against the wall, IDBI Federal Life Insurance now plans to focus on expanding its distribution footprint, including leveraging Federal Bank’s network, to access NRI clients.

Also, the life insurer wants to smartly grow its agency force to cope with the imminent exit of promoter shareholder IDBI Bank in the life insurance venture, a top official said.

Bottomline parameters

Efforts will also be taken to keep strengthening its bottomline parameters such as costs, persistency, surrender, claims, PAT, dividend, and solvency margins to give it a competitive edge. “In 2020-21, we will be branch light and distribution heavy. We will look to ramp up our proprietary channel. We have no choice. We have to grow our proprietary channel. We have our backs to the wall. We have to activate everything from agents, direct sales team, online, brokers and corporate agents,” Vighnesh Shahane, CEO and Whole-time Director, IDBI Federal Life, told BusinessLine.

Distribution footprint expansion will centre around growing the proprietary channel besides leveraging the current relationship with Federal Bank, which now has a 26 per cent stake in the life insurer, he said. Belgian multinational insurance company Ageas owns 26 per cent in IDBI Federal Life.

“There is lot of elbow room for us in Federal Bank. Our Federal Bank share of revenues this year has grown 28 per cent. Can we do more and take it 45 per cent? We will look to leverage Federal Bank more and tap into the NRI customer base of Federal Bank,” he said.

After LIC gaining control of IDBI Bank, which holds 48 per cent in IDBI Federal Life, things have turned difficult for the life insurer. IDBI Bank is primarily focussed on pushing LIC products, and this has had a negative impact on IDBI Federal Life.

From a level of 70 per cent a few years, IDBI Bank now accounts for just about 10 per cent of the revenues of IDBI Federal Life, according to Shahane.

IDBI Bank is widely expected to exit IDBI Federal Life this year, and has already set the ball rolling for exiting the venture.

Besides a private equity player, two leading private life insurers are in the forefront to buy the 48 per cent shareholding from IDBI Bank, it is learnt. IDBI Federal Life Insurance, which had declared maiden dividend in 2018-19, is looking to continue in the dividend list this fiscal, too. It will look to close the current fiscal with a net profit of ₹150 crore, higher than net profit of ₹133 crore it posted last fiscal.

Distribution footprint

While focussing on growing its proprietary channel, the life insurer has not given up on bringing a bank partner to beef up its distribution footprint.

The life insurance player, which is now in the 17th position in industry league, is hopeful of returning into the top-10 league.

“We have to grow multiple times that of the industry growth and our belief is we will do that in the coming years,” he said.

Published on February 21, 2020
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