Ageas Federal Life Targets 40% Sales Growth As Ownership Issues Settle Down

Ageas Federal Life Insurance has set a target of growing its new business premium by 40 per cent in the next three years, as uncertainties over the ownership issues settled down after its Belgian partner decided to buy out IDBI Bank's stake, a top company official said.

After the approvals from Irdai and Competition Commission, the city-based life insurer will become the first in the segment to have maximum foreign ownership of 74 per cent. Currently, only non-life player Future Generali has 94 per cent foreign ownership.

Ageas Federal Life was launched in 2007 as a three-way joint venture between Ageas Insurance International, Federal Bank and IDBI Bank -- which initially held 48 per cent and pared 23 per cent in December 2020 and the rest 25 per cent in March 2022.

In FY21, Ageas increased its stake to 49 per cent by acquiring 23 per cent from IDBI Bank and in March 2022 the Belgian partner again agreed to buy the remaining 25 per cent stake of the LIC-controlled lender, taking its ownership to 74 per cent and the rest of the equity will continue to be held by the Kochi-based Federal Bank.

The company is expecting the stake sale to be closed in the second half of the year.

"We have had excellent two years with very high growth rates. In FY22, our new business premium grew over 40 per cent and with the ownership issues behind us, we are on an exponential growth path and hope to continue with 35-40 per cent growth in new business premium over the next three years," Vighnesh Shahane, managing director and chief executive of Ageas Federal Life, told PTI on Friday.

To ensure this high growth rate, the focus will be on becoming an omnichannel by growing our proprietary channels, such as agency, group, DST, and online in a calibrated manner; ramping up digitalisation efforts; and enhancing our customer experience, he added.

Having earned Rs 94 crore profit in FY22, down from Rs 150 crore in FY21 due to higher Covid claims (Rs 32 crore in the year and the resultant higher provisions), it is one of the few life insurers to have declared profit for the 10 consecutive years and also paid dividends in the past four years.

"We have wiped off all accumulated losses and have been declaring dividends for the past four years consecutively," Shahane said, adding this was primarily due to the massive improvement in margins, which gained 9 per cent in FY22 to 22.4 per cent. He is expecting the value of the new business margin to improve further to 23-25 per cent.

He said the higher growth of 40 per cent was primarily helped by a slew of ULIPS, as the market was on a song since June 2020 and going forward, the company expects non-participatory products to drive growth along ULIPS. 

Shahane said currently over 80 per cent of sales come through Federal Bank tie-up and 10 per cent through agents and the rest through all other channels. But going forward, he wants to make it an omnichannel.

He also said they will be happy to enter the health space as and when the regulator allows the same. It can be noted that the new Irdai chairman Debasish Panda recently hinted at allowing life insurers to sell health policies.

As getting bancassurance sewed up is not very easy, Shahane said they are looking for cooperative banks and non-banking companies for retail sales.

In FY22, its total premium income rose 13 per cent to Rs 2,207 crore from Rs 1,959 crore in FY21, driven by the individual new business premium that rose 27 per cent to Rs 639 crore and a 5 per cent growth in a renewal premium to Rs 1,391 crore, taking its assets under management to Rs 13,907 crore.

In FY22, it announced a net income of Rs 94 crore, making the year the 10th consecutive year of profitable growth since it first declared a profit in FY13.