Shriram Life eyes Rs 110 cr premium

First insurance firm to be headquartered in Hyderabad

Shriram Life Insurance, a joint venture between Chennai-based Shriram Group and Sanlam Life Insurance Limited of South Africa, is targeting to pip all private life insurance players in the next five years to reach the top position.

It is looking at garnering Rs 110 crore of premium in its first year of operations with 95 per cent of it being via its direct agents. The company is expecting cash break-even within three years.

This apart, while the group is planning to enter the non-life and mutual funds business within a year's time, it has ruled out setting up a stand-alone health insurance company in the next five years.

Addressing the media, R Thyagarajan, chairman of Shriram Group, said, "we expect to be the biggest private player in the life insurance segment in the next five years. In fact, we even expect to beat LIC in 20 years."

Headquartered in Hyderabad, Shriram Life Insurance officially launched its operations on Friday. This is the first insurance player to be headquartered in Hyderabad.

"In the first year, we expect to collect a premium of Rs 110 crore with 95 per cent being from our direct agents and the rest from mutual fund distributors or agents," Thyagarajan said. The company is also looking at bancassurance tie-ups and may partner with two banks shortly.

Shriram Life Insurance will be focusing on South India, Maharashtra and Madhya Pradesh in the first few years. It has sought approval from the Insurance Regulatory and Development Authority (Irda) for four products that include an endowment plan, double endowment plan, a money back plan and a unit-linked insurance plan.

"We have got approval for our endowment plan," he said. The company will also be looking at launching micro-insurance products.

Heinie Werth, chief executive (developing markets), Sanlam Limited said, "We will look at increasing our investment in Shriram Life Insurance once the foreign direct investment hike takes place." Shriram Life has been started with an initial capital of Rs 125 crore.

The Shriram Group has a strong force of 65,000 agents through its chit funds and truck financing business. Around 6,000 agents have already been trained to sell the insurance products.

With regard to non-life and mutual funds business, Thyagarajan said, "It should be possible after we demonstrate our success in the life insurance venture. Hopefully, it will be with Sanlam again. We will finalise the plans in a few months."

"We will, however, not set up a stand-alone health insurance company in the next five years, as the health insurance sector is not yet organised," he added.

The Shriram Group has alliances with financial institutions like Citicorp, UTI Bank and Chrys Capital. Newbridge too has expressed its intention to invest around $100 million in the group's truck financing business. Thyagarajan declined the recent reports of Temasek looking at picking up stake in their company.