Belgian insurer Ageas to exit IDBI Federal

Belgian company Ageas is looking to exit the Indian market by selling its 26% stake in IDBI Federal Life Insurance Co, according to people in the know.

An industry official privy to the situation said Ageas has been looking for an exit for some time now. “However, the domestic players have not been able to get a foreign partner till now. And the search is still on,”  he said, requesting anonymity.

IDBI Bank owns 48% equity in IDBI Federal while Federal Bank and Ageas own 26% stake each. Both IDBI Bank and Federal Bank are the company’s bancassurance partners.

To be sure, falling sales of unit-linked insurance products (Ulips) has shrunk the insurers’ toplines. Adding to the woes, even sale of pension products, which contributed up to 30% of the business, has halted.

“Plummeting insurance business in India has been a cause of worry for many foreign investors. The life insurance industry de-grew 14% in the last financial year,” said another senior industry official, requesting anonymity.

Insurance Regulatory and Development Authority (Irda) data show private life insurers’ premium collection was down 16.3% in April.
IDBI Federal may well have borne the brunt of the fall, according to Irda numbers.

During April this year, its premium collection amounted to barely Rs4.55 crore, down from Rs65.28 crore in March, Rs24.81 crore in February and Rs20.84 crore in January for the group and individual business together.

The March heave could be ascribed to the year-end rush for tax-saving instruments that typically helps insurers.

Even earlier quarters were less than favourable. For the April-December 2011 period, IDBI Federal’s premium collection had amounted to Rs27.38 crore, down 32% year on year, as it sold 50,806 policies (down 34%) and covered 2.85 lakh lives (down 44%).

The insurance entity, which came into being in 2008, had issued a little over over 3.77 lakh policies and had over Rs21,251 crore in sum assured as of April this year.

However, R K Bansal, executive director of IDBI Bank, denied Ageas was looking to exit. “The partnership is on a strong track and there is no plan from either Ageas, IDBI Bank or Federal Bank to exit the business,” he said.