Max New York Life posts profit under US GAAP

Max New York Life is probably the first private life insurance company to have turned profitable in the fourth year of its existence.

However, the Indian joint venture "" with Max India and New York Life "" recorded a Rs 21 crore profit in calendar year 2004 under the US GAAP.

Max New York Life has also won the trophy for best performance in agency operations among all New York Life operations outside the United States.

Speaking to Business Standard, Sunil Kakar, the company's chief financial officer, said that the life insurance venture would still take another one to two years to break even under the Indian accounting standards.

"Overall expenses are lower under the US GAAP as opposed to the Indian standard. This is because we are allowed to amortise expenses, largely first-year commissions, over the period of the policy," said Kakar.

As per the Indian norms, companies are not permitted to defer acquisition costs "" commission rates are usually 40 per cent of the first premium income "" over the life of the policy.

As these acquisition costs have to be absorbed within the same year and cannot be deferred, life insurance companies say that it is possible to break even only in the seventh or eighth year of operations.

Meanwhile, Max New York Life, whose US partner's year-ending is December, posted over 100 per cent increase in total premium income in calendar year 2004.

Total premium income touched Rs 348 crore, more than double that garnered in 2003. The company's first year premium income climbed to Rs 206 crore, and renewal premium income crossed Rs 142 crore, registering a 132 per cent growth over the preceding calendar year.

Max New York Life's total income touched Rs 370 crore. It has sold well in excess of 400,000 policies to date. In 2004, the company sold more than 214,000 policies, representing an 89 per cent increase over the preceding year.