Home BusinessHDFC Standard Life lowers capital infusion by Rs 100 crore
Mumbai-based HDFC Standard Life Insurance Company today said the various cost saving measures adopted by the company would lead to less need for capital infusion during the current financial year. The company’s original plan was to invest about Rs 350 crore in the current financial year, which now may come down to Rs 250 crore.
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HDFC Standard Life is a joint venture between Housing Development Finance Corp and Britain’s Standard Life Insurance.
Paresh Parasnis, principal officer and executive director, HDFC Standard Life, who was here to launch two products, said that company’s current capital base was Rs 1,846 crore. During the current financial year, original plan was to infuse Rs 350 crore, of which Rs 50 crore has been drawn. “Since we are taking up some cost-saving measures, this may come down to Rs 250 crore.”
Rationalisation of branches which helped to reduce rent, clubbing training centres, procurement cost reduction through reverse auction are some of the key measures adopted by the company.
“The idea is to rationalise expenses and enhance business before the company hits the capital market,” he said. The company is expected to be there in 2010-11.
HDFC Standard Life had posted a loss of Rs 502 crore during 2008-09. The insurer, however, will break-even by 2013. It aims to bring down management expense to 20 per cent from 29 per cent last year, when the insurer was expanding heavily.
“We are focusing on increasing our efficiency and productivity. We will not add any branch or recruit people in this financial year. We expect a growth of 10-15 per cent and will infuse capital as we write new business,” said Parasnis. Last year the insurer had reported a new business premium of Rs 2,522 crore. He added that policy persistency dropped to 85 per cent in 2008-09 from 93 per cent in 2007-08. “Policyholders are increasingly delaying payments, mainly the self-employed, due to the slowdown in the economy,” he said.