The promoters of Birla Sun Life Insurance have infused Rs 100 crore of additional capital into the company, taking the total capital to Rs 877 crore.
Insurance firm doubles its branch network
KOLKATA: The promoters of Birla Sun Life Insurance have infused Rs 100 crore of additional capital into the company, taking the total capital to Rs 877 crore.
This has been done to meet the company’s capital expenditure plans and to conform to the solvency margin requirement stipulated by the Insurance Regulatory and Development Authority.
The private life insurer is expecting a 75-100% growth in rural insurance.
Vikram Mehmi, president & CEO, Birla Sun Life Insurance, said, “The additional capital will be utilised to strengthen out infrastructure. We have doubled the number of our branches in the last fiscal. We expect to add more branches in tier 2 and tier 3 towns. Simultaneously, our technology platforms are being upgraded to support growth”.
Analysts such as Kotak Institutional Equities have estimated BSLI’s fair value at Rs 5,400 crore. The agency has upgraded its estimate for the company by 35% to reflect higher volume growth on the back of its expansion plans.
“We believe Birla Sun Life’s renewed vigour in expanding its agency force and its branch network will drive its volume growth, though the company may continue to lose market share due to intense competition”, the research firm said.
Birla Sun Life was the only company to sell ULIP products in the initial phase of industry development, but most other players subsequently introduced this product, leading to an erosion in the company’s marketshare, it said.
Perhaps this trend is getting reversed as the company has been gaining share now.
"As per IRDA’s New Business Premium ranking for the month of August, Birla Sun Life is at the No 5 position among private life insurers with a market share of 2.1% of the total life insurance industry”, Mehmi said.
The assets under management for Birla Sun Life Insurance have crossed Rs 5100 crore as on September 30, 2007.
On rural expansion plans, Anjana Grewal, senior VP, marketing and communication, Birla Sun Life, said, “We would like to see rural as a profitable channel for us. The company has built a strong network through 8 Aditya Birla Group (AG) units and 97 NGOs that act as indirect rural sales channels. Then there are our 48 branches that form the direct channel. This year we are aiming at 4 lakh policies”.
The company launched two micro insurance products-Bima Suraksha and Bima Dhan Sanchay recently.
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