HDFC Standard Life to up equity exposure

Our Banking Bureau

Mumbai, Nov 5: HDFC Standard Life has decided to get a bit aggressive and is prepared to invest up to the maximum permissible amount in its equity exposure in the domestic market.

Insurance Regulatory and Development Authority (Irda) permits a maximum of 15 per cent investment by insurance companies.

‘‘The board of the insurance joint venture has taken a policy decision to increase its exposure in the domestic equity market despite the depressed market conditions,’’ said Mr Deepak Parekh, chairman, HDFC Standard Life, after announcing a tie up with Union Bank of India (UBI) for distribution of HDFC Standard’s insurance products.
According to Mr Parekh, domestic insurance companies LIC shy away from the equity market and has a limited equity exposure of up to 5-6 per cent.

Said Mr Parekh: “Our board deliberated the issue and has decided to invest in the equity of good companies as well as in good industries in a major way.” “We do not mind investing in tobacco companies if it is a good business oportunity,” he added.

Extensive investment in real estate, equities and income from rentals are normal practices of insurance companies.

On bancassurance in the country, Mr Prekh said, “Our own mutual fund gets 15-18 per cent of business from the banks. We have chosen Union Bank as it has a vast network of branches in Western India.”

Union Bank will distribute the life insurance and pension products of HDFC Standard Life through its branch network.

HDFC already has a similar tie-up with Indian Bank. It will be looking at a bank based in the east for expanding its network in that part of the country.

HDFC Bank is also planning to cross sell the insurance products once the corporate agency guidelines are in place.

HDFC Standard Life is gearing up for the pension fund business. It is awaiting the government’s policy on the pension report submitted by Irda.

“I don’t think the final picture on pension funds business will be clear before one year,” said Mr Parekh.

In its report on pension funds, Irda has suggested that a tax rebate on an additional Rs 20,000 be extended to investments in pension funds as is the case with investments in infrastructure bonds.

Having tied up with HDFC Standard Life, Union Bank can offer one more product to its customers and thus become a single point provider of financial products and services for its products, said Mr V Leeladhar, chairman and mananging director, Union Bank of India.