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No compromise to reach on top: Max New York

Compromising on certain ethics and quality is the price that one needs to pay in India to become the number one player, the private life insurance company Max New York said.

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NEW DELHI: Compromising on certain ethics and quality is the price that one needs to pay in India to become the number one player, the private life insurance company Max New York said on Monday, adding it was not willing to pay this and would be comfortable with the fifth or sixth slot.
    
"I think there is a price in this country that you need to pay to just get to the scale and we are just not willing to pay the price," Max New York Life Managing Director Rajesh Sud said on why the company, whose parent include the US insurance giant New York Life, was not aiming for the top slot.
    
Asked what is the price, he said, "If the price is (compromising on) quality of representation, if the price is to get your licence exam (for agents) passed through means that we don't necessarily approve of or appreciate, if the price is for retaining clients because you are acquiring clients that you are not able to serve properly...
    
"If there is a price for financial discipline that you must follow in an organisation of our size and scale, these are the things that we would not like to do."
    
When asked if the price he was referring to means corruption in the system, including regulatory authorities, Sud said, "I am not saying who is doing what... it has nothing to do with rampant corruption, it has to do with risk return as I said.
    
"There may be things that other organisations find OK in scope of things to do which are not illegal. I am not accusing them (competitors) of being illegal. It is their way of doing business which completely conflicts with our vision of the most admired."

Sud, however, claimed that "we will be the number one on measures such as value for clients, that we get in. We will be the number one may be in terms of returns that we finally offer to clients in longer run. We will be the number one, perhaps, when we start accumulating revenues".
    
He said the company, which just recently approved a plan to invest an additional Rs 2,600 crore to take the total investment to Rs 3,600 crore by 2011-12, had deferred its target for break even for faster growth.
    
Sud said that the company would look at sum assured rather than first year premium and added that "we are very comfortable being the number fifth or sixth on first year premium provided we know that we are retaining our clients".
    
"In fact, we are the second best. The number one is HDFC Standard Life which has conservation ratio of 89 per cent... Our conservation ratio measured by industry is 86 per cent which we believe is clearly among the best," he said.
    
On returns to investors and delay in attaining the break even point, he said investors in the business look for long-term period and added that the break even point had been deferred by a couple of years to 2011-12 from the initial target of 2009.
    
"Initial plan of the company, when it was set up, we were thinking of Rs 1,000 crore capital... Today we have approved a plan of Rs 3,600 crore of which we have already deployed Rs 1,782 crore. The entire funds would be deployed by March 2012," Sud said.
    
Terming the growth of the company at about 65 per cent year-on-year basis since inception in 2001, he said "in our case we have embarked on growth journey that we started this year and is called 'Everest' amongst us internally. Under this, we want to rapidly deploy the success that we have had at smaller scale to a much larger scale."

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