Edited excerpts:
J&K Bank has sold half its stake in PNB Metlife to a new investor. How does it change things at PNB Metlife? And what it means for the planned IPO?
We will have another shareholder. J&K Bank is a strong partner and will continue to be so. As of now, the decision where all shareholders are aligned is to have an IPO. We will wait for our banks to tell us the right time in terms of market conditions. Every shareholder is looking to dilute. The offer is to dilute around 25% stake in the process.
What about your own capital needs? How much do you need to grow as well as be in compliance of regulatory orders?
We don’t need capital. Our solvency ratios are 200%. Even with aggressive growth, we have done our scenarios. The DRHP is completely an offer for sale. In the next three to five years, we don’t need capital. If we continue to grow at this rate, we will not need capital. Risk-based capital will also free up capital.
PNB Metlife still has accumulated losses. Does that mean retail investors may have to live with no dividends?
We are making profit for last 7-8 years. We have some accumulated losses. As we continue to make profit, it will be wiped out. Technically, we cannot pay dividends. In India, investments are about growth and growth potential. This company is all about growth.
You have been growing at 11-13%. Is this sustainable?
We have a big geographical spread. We can work with the government for financial inclusion. We have 11,000 branches. 60% of our business comes from semi-urban and rural areas. We are placed better than many others. We have been growing at a pace faster than the industry, seen a CAGR of 20%. Depending on the market, we can maintain faster-thanindustry growth. Our growth has been 11-12% while the industry was at 8%.
Insurers are focusing on protection to generate higher margins. Are you for better margins, or higher growth rate?
Over the last three years, we have been focusing on protection. We have 17% margin. As for others, margins are higher for protection followed by par, non-par and then Ulips. Listing brings in transparency. We have gone through the rigour. The focus will shift to protection. The questions are getting sharper and will be on what generates value and what’s good for the customers.
Punjab National Bank contributes 50% of your business. What happens when PNB opens up to more insurers under an open architecture?
We have an agreement with PNB and they are our shareholders. In India, none of the bankpromoted companies have opened up. The agreement talks about what they need to do. They need to deliver new business premium and if that does not happen, the partnership extends. We have a young history with them. In 2013, we became partners. You need time to integrate systems, engage with them. We have reached 40% of the branches. I see a lot of opportunities. We have specified persons in the banks. We continuously train them via e-learning, physical training and help them get certified. We have relationship mangers handling 2-4 specified persons.
How much business do you get from PNB? What is the potential?
Around 50% of the sales come from PNB. We want to grow banca and agency. We have strong agency, banca and direct channels. PNB has been saying they will dilute only to the extent of price discovery and they want to look at PNB Metlife as a long-term asset. There is no associate company of the bank which can give them the fee income that we can give. They have value accretion because they hold stake in PNB Housing.
Will the proposed product guidelines revive Ulips?
Ulips have taken a beating. For some companies, it is a large part. My belief is, we need to have a bouquet of products. We need to sell them right. Ulip is one of the products in the bouquet. The new product regulations will allow insurers to look at riders differently.
