Risk and romance: Shikha Sharma

LUNCH WITH BS

Shikha Sharma

Unlike several other private insurance CEOs, Shikha Sharma, managing director and CEO of ICICI Prudential Life Insurance Company, does not complain of the lack of a level playing field for private life insurance players over the state-run juggernaut Life Insurance Corporation (LIC).

"LIC policies are backed by the guarantee by its promoter "" the government. So what? ICICI Bank and Prudential can also offer guarantees to our policies, if they wish to do so. Whether the government guarantee for LIC should continue is more a fiscal than a policy decision," Sharma said, sipping iced tea at Gallops on a Saturday afternoon.

The choice of Gallops "" a multi-cuisine restaurant located in the heart of the Mahalaxmi race-course in Mumbai "" was hers. Sharma loves this place because of the greenery and, of course, the food.

Sharma can afford to be confident about the private sector in the insurance business. In three-and-a-half years since the joint venture started operations, the company has bagged a 35 per cent share of the private insurance market (the remaining 65 per cent is shared by the other 11 players). Add in LIC and ICICI Prudential's overall share is about 5 per cent.

But Sharma is more excited about the private sector's performance, which has exceeded expectations. "In the three years since the industry was opened up the private players have grabbed a 15 per cent market share. This has not happened in any other industry in India "" banking, mutual funds or telecom," she points out enthusiastically, nibbling on the mint leaf that was floating on her iced tea.

We chose Saturday for this lunch because the ICICI Prudential corporate office is closed, though the branches work six days a week. It was good choice food-wise but live commentary of the Bangalore races, broadcast through strategically located close circuit TVs made conversation increasingly difficult.

Skipping the starters, Sharma opted for the main course of a continental menu "" fish black pepper, chicken stroganoff and vegetable lasagne "" which all of us shared. Sharma ate the fish and lasagne but avoided the stroganoff. "I like fish, not chicken. Had we gone for Indian food, I would have gone for pila dal, bhendi and kadak roti," she said.

For her career, given a choice she would have become a scientist. "I went to a girls' school. For my graduation, I wanted to study at Miranda House but my father preferred Lady Sri Ram where I read economics," she said, though her preference was for Physics. She was campus recruited by ICICI (from the Indian Institute of Management, Ahmedabad) in 1980 as a project officer.

For the next 12 years, she worked in almost every department of the financial institution "" resource raising, venture capital, leasing, technology "" till she was assigned to set up the institution's investment banking arm, I-Sec in 1992. In 1997, she returned to the parent as strategist for CEO K V Kamath, a role Kamath had played for his mentor, former ICICI chief N Vaghul.

In 1998, she rolled out the retail assets strategy for ICICI, which was gearing up to become a bank. "That was a new game. The entire mindset of the institution had to be changed. In corporate banking, you take six months to appraise a project but in retail you need to do credit appraisals in 24 hours. There are bound to be mistakes but in ICICI we are allowed to make mistakes. Here, all managers have the freedom of an entrepreneur," she says proudly.

Sharma was part of the management that worked on the memorandum of understanding (MoU) with Prudential for both the mutual fund and insurance outfits so she was almost the natural choice as head for the insurance venture.

Indeed, she found the job of setting up the insurance company easier than the foray into retail banking. "My brief from Mr Kamath was leadership on a profitable basis. We have been able to do this," she said.

But doesn't a life insurance venture take six to seven years break even? How has ICICI Prudential Life become a leader on a profitable basis when the company booked a higher net loss of Rs 200-odd crore in 2003-04?

Sharma had her answer ready: "Through Prudential, we have been able to set key performance indicators that help us see that we are operating on a profitable basis. This is in terms of productivity ratios among a host of others.... We have met and exceeded targets on every single parameter."

In the insurance sector it is possible to achieve a faster break even if growth slows, but that is not on ICICI Prudential's radar.

"The ratio of new premium to renewal premium needs to change to approximately 1:2, depending on the product mix, only then can one break even. Rising renewal premiums help insurance companies break even faster provided that new premium income is rising at a lower level," she said.

Sharma is confident about the company's future because she says it offers the maximum number of products and channels to sell these products.

"We were the first to go in for multi-distribution channels "" web, call centres, agents, bancassurance, corporate agents, broker distribution. When LIC was offering guaranteed returns on pension products, we decided against any guaranteed returns but offered our customers open market options," she elaborates.

So is she ready to take on LIC? "It's not possible to take on LIC but possible to get closer to LIC," she answers frankly, "but I have many new strategies that have not been tried out...."

How long will it take to get "closer to LIC"? Would that happen during her tenure (she is 45 years old at present)? She refuses an answer, saying she could not make forward-looking statements since both the promoters "" ICICI Bank and Prudential "" are listed entities.

Was the insurance market growing or was everyone eating into the LIC pie? "We don't have data to support the claim that a new market is being created. But the fact is that many customers are buying insurance policies for the first time. We are also seeing big policies. Earlier, tax planning was the only reason for buying insurance policies. Now, it is part of one's investment strategy," she said.

We're on to the coffee now, extra-milky to Sharma's tastes, and ask her whether she thought all 12 new players could survive in this market. Sharma paused for a moment, sips her coffee and said diplomatically: "There may not be too many players because one needs to acquire scale in order to be economically viable."

How many would actually survive? "We have seen consolidation in banking and mutual funds. I would say more funds died than banks. The insurance sector may follow the mutual fund industry more closely than banks when it comes to consolidation," is all she is willing to admit.

We changed the topic and asked her about hobbies and life beyond work. Her answers were surprising. The hard-headed insurance chief likes to read romance novels from Mills and Boon, and Harry Potter. She is also fond of watching films, the latest being Hrithik Roshan starrer Lakshya.

As a stress buster, she's taken up classical singing, which she learns with her daughter. "I used to suffer from migraine. Once I started this, the problem vanished," she said.

The decibel level in the restaurant is deafening because a race is reaching its climax (yet, mobiles are not allowed in case you disturb other guests!) and we almost shout our next question which was what she saw as her strong point.

"I am transparent and people can trust me. I can work with less data because I am prepared to take risks," she counters as loudly.

And her weakness? "Oh, I have made a lot of mistakes, particularly, in man management. I have put the right people in the wrong places and vice versa. Implementing a strategy is always more important than the strategy and we make mistakes at the implementation stage," she said.

Sharma is not very prominent on the social circuit. Doesn't that affect her business? Her frank answer was: "Yes, I miss out on the networking the way male professionals can do at clubs in the evenings. So, I try to be a professional and come out with more ideas. However, due to liberalisation, relationships count less and delivery counts more. In a competitive world, value and quality count more than anything else."

In her more than two-decade career in ICICI family, Sharma has not spent more than three years in any of her assignments. So was she about to move on from insurance too?

"I love this job and I do not feel that I have done everything I want to do," she replied. What if ICICI Bank calls her back after Kamath retires?

"There are worthy contenders for Kamath's job. I am also not part of the bank. No one has made me an offer so far," she counters and we're reminded of the embargo on forward-looking statements.