Interview | Our new products contributed to 20% to 25% of total biz: Kamlesh Rao, MD & CEO, Aditya Birla Sun Life Insurance

Irrespective of the performance of the capital markets, people have been putting their money in insurance products and the sector has been doing well, says Kamlesh Rao, MD & CEO, Aditya Birla Sun Life Insurance (ABSLI). In an interview with Mithun Dasgupta, Rao says ABSLI does not need to raise capital right now as it had raised sub-debt of about Rs 150 crore two months ago. Excerpts:

How are your individual life insurance and group life insurance businesses performing?
For individual business for the private players it is de-growing by 6%. For Aditya Birla Sun Life Insurance, we are growing by 6-8%. We are better than the industry. For the group business, the private industry is growing by 15% and our company is growing by 50%. So, that’s the broad view. Industry is getting better as you look at the first quarter, where the de-growth was close to 40%. So, from there, if you look at the year-to-date (YTD) numbers for nine months since then, the de-growth has come down to about 6%.

What are the reasons for the very high growth in group business?
So on the growth side, our fund performance has been very, very good. The group is a more corporate business. Our performance for the last 18 -24 months has been very good. And therefore, when we are going out and looking for opportunities, people are investing their money. So that’s sort of larger reason for group business going up.

For individual business premium, I think we have done a lot of new stuff, launched at least three main products last year amidst the Covid crisis. And I would like to talk about the new product that we have launched recently, which is the DigiShield plan. It is a hyper-personalised term plan with 10 different variants catering to all kinds of protection needs of the customer. All our new products that we launched are successful and have contributed to our business growth in the last nine months. Our new products put together have contributed to roughly about 20% to 25% of the total business that we have done.

What percentage of your new business comes from group insurance?
It depends on year to year. Basis our AUM, our group business is close to 30%. This year the contribution would be around 50%.

On the products side, what are the products that are very much in demand now?
We always want to have a balanced mix, that’s what gives us the right margins in the individual business that we do. And, the two products which are doing well in the market are basically guaranteed saving products and protection products, which is pure term. In the last nine months, we’ve launched three products in the guaranteed savings plans and all of them have been successful for us.

During the current bull-run in the markets, are you attracting the desired kind of money for your savings plans compared to mutual funds?
The markets are doing well. But, you know, if you look at the data of how many people are active in the capital markets, that’s hardly any number, I don’t think the depth of retail in the capital markets is that high. Irrespective of the performance of the capital markets, people have been putting their money in insurance products and the sector has been doing well. I don’t think there’s a correlation between the two.

Kamlesh Rao-Aditya Birla sunlife

It’s possible that if the markets are good, more money may come in, and if the markets are not that good then may be a little less money may come in. But basic growth will come out of the fixed allocation. People have realised that some amount of money should be attributed to insurance— both in life and health — and that evolved mindset is helping to get more money in the insurance sector. I don’t think it’ll be a function of how the markets will do going forward.

Is there any need for capital raising on your part?
Capital is always something as you keep growing you need to look at. We don’t need anything right now. We raised sub-debt of about Rs 150 crore in the month of December. We thought we should get some currents of sub-debt, also interest rates were pretty low so it was a good opportunity to raise the sub-debt at a lower rate of interest. So, we are not doing any equity infusion right now. As and when the growth will demand either raising more sub-debt or getting more equity infusion, we will definitely look at it. We have debt limit of Rs 550 crore, we will first use that before looking at equity.