State-owned Central Bank of India last week acquired a 25.18% stake in Future Generali India Life Insurance (FGILICL), marking its formal entry into the life insurance business. FGILICL managing director and CEO Alok Rungta tells Narayanan V how the coming together of two 100-year-old institutions — Italy’s Generali Group and Central Bank of India — will be a “game changer” for its business. Excerpts:
How was your performance in FY25?
Our gross written premium (GWP) rose 39% year-on-year to Rs 2,511 crore. New business premium nearly doubled to Rs 1,192 crore, while renewal premium grew 10% to Rs 1,318 crore. Within the new business, individual premium increased 19% to Rs 476 crore, and group new business surged 240% to Rs 716 crore. We are nearing the breakeven, having reduced our loss by 94% to Rs 6.4 crore, from Rs 113.9 crore in FY24. Overall, it was a strong year across parameters.
Group insurance seems to be the key growth driver?
Group insurance includes group term life, group credit life, and group fund business. Most of our growth came from the group fund segment, where we manage retirement funds like superannuation, leave encashment and pension funds for PSUs and banks. Institutions, being ahead of the curve, anticipated a rate dip and started locking in yields even from January, which led to a surge in business.
We have been cautious on group credit life after the challenges after Covid. However, group term life has been a real value driver for us. We focus more on MSMEs and mid-sized enterprises, compared to large corporates. It’s a competitive, price-sensitive segment, where we see strong growth potential.
What’s your plan to grow the individual business?
The industry’s individual business premium is projected to grow at a CAGR of 15% over the next five years. If the market is looking at 15%, we should aim for 18-20%. But that’s in a business-as-usual scenario. For us, there’s a potential kicker, with the Central Bank of India coming in as a shareholder. If we are able to quickly start business through its bancassurance channel, it could be the real game changer for us. At present, 65% of our distribution is through the agency channel. We don’t have partnerships with any large bank. Central Bank of India has 4,800 branches across the country, and over 15,000 touchpoints, including ATMs, which in itself is massive. So instead of 15–20% growth, we would look at growing two-three times.
When do you expect the Central Bank’s acquisition to be fully consummated?
The share transfer happened on June 4. Now, Central Bank of India is formally a shareholder. The bank has acquired more than 25% through the Insolvency and Bankruptcy process. It is committed to take it to 26% while the Generali Group will hold 74%, which is the maximum permissible limit. We are looking at rebranding the company. Once there is an agreement, we will start investing in the brand to improve recall.
We will have to revisit whether we carry the ‘Future’ brand or not, because new shareholders would prefer to have their names on the imprint. So, that’s the discussion—what should be the name and composition. Logically, I don’t think we’ll carry the Future brand. I believe that should get addressed soon. A lot of work will follow, including name change, which will trigger amendments to the Articles of Association, rebranding, and more. Approvals will be needed from the regulator, Registrar of Companies, etc. So, all of that will be a 12–13-week process before we can go to the market with the new brand. While the bank is onboarded as a shareholder, the process of rebranding and all that will take around three months from now.
You were closer to breaking even. Will you achieve profitability in FY26?
The dichotomy of life insurance is that the more I write, the more I make losses. Ideally, we should break even this year. Practically, I don’t think so. With the onboarding of a large bank partner, we are going to have a lot of upfront costs. For example, we will run a massive rebranding campaign. We have been underinvesting in this area. And with new business, there’s always new business strain. So, the reality is it will take a year or two before we actually break even.
The beauty and the challenge in life insurance is that on the cost side is front-loaded, and the profit comes in the tail. But that’s okay because we know the value generation is much better in the long run.