NEW DELHI, July 8: Confident of India’s robust growth potential despite the short-term economic headwinds, Japan’s Nippon Life has said it will put to use all its resources to help its Indian partner Reliance Life become the country’s top life insurance company.
Nippon Life, Asia’s largest private life insurer and seventh biggest globally, has a whopping asset size of USD 650 billion and has made two of the largest FDIs (Foreign Direct Investments) in the Indian financial services sector—over Rs 3,000 crore in Reliance Life and about Rs 1,500 crore in Reliance Capital Asset Management Company (RCAM).
Listing out the factors that attracted it to India, Nippon Life Insurance Company’s President Yoshinobu Tsutsui told PTI that numbers like overall population, the demographic percentage of young people and steadily rising per capital GDP make India a very attractive investment destination for it.
Asked about the policy-related headwinds in the country, Tsutsui said Nippon does not get perturbed by such issues.
“No. We are not worried about at all. Because we are a life insurance company and we invest from long term perspective,” he said in an emailed interview.
“When I say long term perspective, we don’t look at short-term fracturation of the market, due to the currency and the short-term spilling down of the economy. I believe that India is a growing market in the long term,” Tsutsui noted.
Asked about its expectations from Reliance Life as a partner, he said: “My first hope is that Reliance life will become No.1 life insurance company in India. And to realise that goal, we are more than happy to utilise all the resources we have got to realize that dream for Reliance Life.”
While state-run LIC is the country’s largest life insurer overall, Reliance Life Insurance has been the largest private life insurance company in terms of number of policies (over nine million) for two consecutive years as on March 31, 2012.
However, Reliance Life was the country’s seventh largest private life insurer in terms of total new business premium and sixth in terms of individual new business premium for the last fiscal ended March 31, 2012.
The company recorded its first full year of profits in 2011-12 with profit before tax of Rs 370 crore and commands a private sector market share of over 5 per cent.
Nippon’s 26 per cent stake purchase for Rs 3,062 crore pegged Reliance Life’s total valuation at about Rs 11,500 crore. Besides, Nippon Life has also acquired 26 per cent stake in RCAM, the Anil Ambani-led Reliance Group’s mutual fund business, for about Rs 1,500 crore.
These investments have come at a time when concerns are being raised in certain quarters about a perceived notion of slowing pace of reforms in the country, especially in areas like FDI policies.
Talking about the factors that made Nippon Life chose Reliance Life as its Indian partner, Tsutsui said that Reliance group enjoys strongest brand in India, not only in life insurance but also in other areas.
“The fact that they have a vast distribution network across all over the India and already have a strong business base was also very attracting for us,” he said.
“Nippon Life has a 124-year history and throughout we have gathered various experiences, know-how and best practices in Japan. Now, it’s our turn to share the experience and we want to contribute to the growing, developing markets like India.
“However, there are many things we don’t understand and don’t know about India. We wanted to make sure that when we enter this market, we need a strong, trustworthy local partner,” he added.
Asked about the way-ahead for this partnership, Nippon Life President said that the customer satisfaction is a key area of focus in life insurance business.
“We make it a rule that all our sales people visit every customer at least once a year periodically. Throughout these periodic visit, not only are we able to protect our customers and address their changing needs of their life stage but at the same time, this visit become great opportunities to cross sell or up sell or get a re-follow of another new customer.
“So the thing is throughout this customer service activity we are able to acquire new business. That is why we are focusing on this customer service activity,” he noted.
“I am not saying we are addressing 100 per cent of the customer satisfactions but we would like to reciprocate this kind of experience or initiative that we have been doing at Nippon life also at Reliance life,” Tsutsui said.
Talking about the products, he said that unit-linked policies make for a majority in India.
“But I believe going forward death protection will be main products in the market that is going to be required by Indian population. So will be health insurance, annuity products also. We are interested in what kind of trend Indian life industry is going to take in terms of product development.
“As and when Reliance life feels necessity to capture that trend of shift in the product portfolio, we will be more than happy to help them in developing that kind of new products,” he said. (PTI)
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