Slashing costs and launching a slew of low-charge products contributed to life insurer ICICI Prudential Life Insurance's healthy top-line in FY 10 when it posted its maiden profit of Rs 258-crore, a top company official said.
"Our key focus for 2010 was profitability. We also tried to avoid infusing capital. We launched an array of low-charge products that gave us a very good top-line revenue and also cut costs," ICICI Prudential Life Insurance's Managing Director and CEO, V Vaidyanathan, told PTI in an interview here.
Going forward, the life insurer is now confident of a growth in profits and eyeing a 10 per cent marketshare this fiscal, he said.
The company had posted a loss of Rs 780 crore in the year-ago period.
Vaidyanathan said that cutting costs of over Rs 350 crore was a major factor that has contributed to the company's profitability in FY 10.
"Our good performance in FY 10 is the result of over 10 years of work put in by many people. Our staff whole-heartedly worked in reducing costs and pushing new launches. We added new revenue-lines," he said.
Expense ratios were also brought down from 11.8 per cent to 9.1 per cent.
"Expense ratios are a direct indicator of efficiency in our industry. We have redirected the expense cuts to growth areas. In some cases, this has helped," Vaidyanathan said.
The company also re-filed its products to make them more capital-efficient. "All this contributed to our profitability. We now have an efficient platform for a robust growth in the years ahead," he said.
The ICICI Prudential Life Insurance chief highlighted the introduction of new products last year as a major growth-driver.
"They contributed to over 30 per cent of the total volumes within the same year," he said.
The new business premium, on annualised premium equivalent (APE), was only marginally up at Rs 5,345 crore.
With the economy now on an upswing, the insurance major now plans to grow its marketshare, though marginally from the current levels.
"We are eyeing a 10 per cent marketshare this fiscal," Vaidyanathan said, adding "the strategy to break new ground will be through innovative concepts and products."
Consolidation would be the mantra for the company this fiscal, he said, and hence there would be no new branches added this year.
Asked about the company's road-map over the next decade, Vaidyanathan said, "The company's focus would be on earning profits on a sustainable basis. Growth will be a key focus area. We are confident to manage both these objectives. Also, a decade is a long time, most insurance companies will be listed by then."
The company's solvency ratio is at 290 per cent, as compared to the regulatory requirement of 150 per cent.
On hiring, Vaidyanathan said the company would do so only to fill attritions. The current headcount is 20,000.
Last year, the company's headcount reduced by 3,000 people. "These were normal attrition of last year, as well as performance related exits after the last performance cycle," he said.
"Our managerial attrition across all levels is low at 15 per cent. For the senior team of about 100 managers, the attrition is in low single digits," Vaidyanathan said.
The company has given increments and bonuses to its employees with the average increment at around 12 per cent.
"Top-rated performers have been given increments of around 25 per cent," he said.