Reliance Capital while expanding some of its business like mutual funds, private equity, consumer finance is also in the process of restructuring other operations like life and general insurance. Reliance Capital managing director Sam Ghosh speaks to FE?s Sitanshu Swain & Kumud Das outlining the priorities for the company.
Any plans to sell stakes in life insurance venture ?
We are looking for a stake sale in our life insurance venture. In non-life too, we?re looking for a suitable foreign partner. But, until the guidelines on disinvestment comes from the insurance regulator,Irda, we?ll not be able to know what the clear picture is.
Any discussions with Sebi on the issue so far?
Yes. We have interacted with Sebi.
Will you go for disinvestment plans first and then go for a foreign partner or both will happen together?
The ideal way is to get foreign partner first and then go for an IPO.
How are you preparing yourself to implement the new regulations on Ulips as announced by Irda from Sep 1?
Nearly 50% of our business came from the sale of non-Ulip products during Q1. Now we want to make the proportion of traditional vs Ulips products in the ratio of 45:55 . The surrender charges are also likely to come down by 40-50%. Also, we are looking at revised product design. Companies with a bigger renewal base, will not get affected much. But companies, which have started afresh and that have lower renewal base, will get affected.
How will the new regulations impact the agents?
The Ulip agents commission, which is 15% for the first year will come down to 5-10% during the next year and would get completely phased out in next three years . We will also review agents? performance through online tests before renewing their contract. Broadly speaking, each of our agents gets 10-12 polices a year on an average.
Will it affect your expansion plans ?
We are not opening any new branch for next one year. But, we are increasing our agency channel by 40-50,000 per year.
What are your capital infusion plans?
We have already infused capital to the tune of Rs 3,000 crore. In addition to it, we are planning to infuse Rs 200 crore during the current year itself and again we will be infusing Rs 300 crore during the next year.
How you are re-organising your general insurance business which has been hit by large claims?
We have decided to scale down our general business and will do only those business which are profitable. In health insurance, we have scaled down our business in the individual segment. Though no-claim bonus would continue, still we?ll increase the premium for health insurance. In motor segment, claim was quite high in one or two areas. So, we have scaled down the business here too.
What are the plans for other subsidiaries of Reliance Capital?
At Reliance Capital, we have created two new subsidiaries?Reliance Consumer and Reliance Housing finance. While we have pushed the new businesses like SME, commercial vehicle and commercial equipment to Reliance Consumer, Still, 40% business continues to remain with Reliance capital itself.
Unsecured loanbook was getting phased out slowly. Total book size is at Rs 9,100 crore in Reliance Capital, while the sum of Rs 4000 crore is lying with our two subsidiaries.