Aviva expects to break even late

Aviva Life Insurance may see a delayed break-even owing to the high rate of growth it has witnessed in 2006. The company witnessed a growth of 111 per cent in 2006.

The premium income grew to Rs 2,700 crore in 2006 against Rs 970 crore in 2005. The present value of premium income (PVPI) of the company stood at Rs 2,694 crore.

Vivek Khanna director marketing Aviva Life Insurance, India, said, the company had targeted 6-8 years from inception to reach the break-even point, but insurance was an industry where high growth rate led to delays in achieving break-even since it required more investments to meet the demands. However, Aviva was not complaining and is committed to long-term goals, Khanna said.

Khanna argued that the company had seen a decline in the lapse ratio over the years with the introduction of varied products for consumers. The promoters infused Rs 199 crore in the venture towards the beginning of the year and there was no requirement for further capital in the current year, Khanna said.

Aviva, the 74:26 joint venture between Dabur and Aviva Plc, started operations in 2002. The company has a market share of 5.1 per cent among private insurers. The company had so far focused mainly on unit linked products (ULIPs), and has 16 products.

Bancassurance has provided 65 per cent of Aviva's business while the rest came from direct sales executives. The company, which already has tie-ups with banks, is looking at collaborations with co-operative banks and regional rural banks to increase penetration.

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Launches Dhan Vriddhi

Aviva Life Insurance today introduced a non-ULIP insurance product designed to provide a combination of savings cum protection plan with guaranteed returns. The new product called Dhan Vriddhi is designed to provide guaranteed addition of Rs 70 per Rs 1,000 sum assured.

The policy also provides a payout of 20 per cent of the basic sum, assured as survival benefit at regular five-year intervals till the policy matures. The policy can be bought for a term extending 10 years to 25 years.

The minimum annual premium is Rs 5,000 and the maximum depends on sum assured. The policy is applicable for people between 13 to 55 years of age. In case of the accidental benefit rider, the minimum and maximum entry ages are 18 and 50 years, respectively.

Vivek Khanna, director-marketing, Aviva said that although 98 per cent of the company's business came from ULIPs, the capital guarantee product would attract people wanting insurance and assured returns.

He said Aviva might launch more such non-ULIP products in the future to meet the varied demands of the customers.