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Magma insurance JV changes track on foreign ally's pressure

The insurance firm is reducing dependence on automobile segment

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Amid rumours of a possible exit of its German partner HDI Global SE, Magma HDI General Insurance Co is initiating a course correction, with a strategy to reduce dependence on automobile insurance and diversify and focus into heath and commercial insurance too.

Indian partner Magma Fincorp is a leading player in commercial vehicle and SME financing while HDI is the third largest insurer of Germany.

“We are taking effort to diversify our portfolio while continuing to grow. Our basic strength has been motor insurance, and in FY17, it accounted for 80% of our gross written premium of Rs 423 crore. The rest consisted of commercial like fire insurance. But, for the next three years we would like to bring down share of motors to 60% with share of health and commercial insurance at 20% each,” Rajive Kumaraswami, MD and CEO, Magma HDI said.

The effort is paying up with the share of motor insurance out of premium income going down to 75% in the first six months of FY18 with health, the newly-launched product, accounting 3.5%.

Out of Rs 423 crore of premium, the insurer which entered the market in 2012 earned a profit of Rs 6.3 crore, and in the first half, premium income has grown by 28% to Rs 240 crore.

While Kumaraswami didn’t outright deny reports of the likelihood of HDI’s exit, he stressed that the business has turned around last year from loss of Rs 12 crore on a premium of Rs 427 crore.

Despite the requirement of expected growth in business, Magma HDI however, doesn’t see requirement of additional capital any time soon.

“Considering solvency margin of 2.26%, higher than the requirement, and based on the trajectory, for the next few years we would remain self sufficient,” Kumaraswami said on the sidelines of the launch of its maiden health insurance product OneHealth.

In a cluttered market, the company hopes to make a mark with a differenciated product that covers new age illnesses like depression or infertility treatments.

Along with diversification of portfolio, there would be expansion of reach.

“We are currently in 86 out of the 300 odd branches of Magma Fincorp. In the next one-two years, our objective is to reach out to all these branches. How that our senior leadership is in place, we now need foot soldiers to spread out,” Rajive told DNA Money.

Rajive, who has spent years with ICICI Bank, was brought in by parent Magma Fincorp in 2016 followed by a new management team assisted by deputy CEO Vikas Mittal.

The insurer would stay away from conventional general insurance products like crop or group insurance policies. 

DIVERSE BASKET

  • The insurance firm is reducing dependence on automobile segment
     
  • It is looking to diversify and focus on heath and commercial insurance
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