Compromising on ethics and quality is the price one needs to pay to become the number one player in India, private life insurance company Max New York said on Monday.
"I think there is a price in this country that you need to pay to get scale and we are just not willing to pay the price," Max New York Life managing director Rajesh Sud told PTI, explaining why the company, whose parent company includes the US insurance giant New York Life, was not aiming for the top slot.
Asked what the price was, 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 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 things we would not like to do."
Asked if the price he was referring was the 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. I am not accusing them (competitors) of being illegal. It is their way of doing business which completely conflicts with our vision of (being) the most admired."
Sud, however, claimed, "We will be the number one on measures such as value for clients that we get in. We will be the number one, maybe, in terms of the returns we finally offer to clients in the longer run. We will be the number one, perhaps, when we start accumulating revenues."
He said the company, which recently approved a plan to invest an additional Rs 2,600 crore (Rs 26 billion) to take its total investment to Rs 3,600 crore (Rs 36 billion) by 2011-12, had deferred its target for breakeven for faster growth.
Sud said the company would look at sum assured rather than the first year premium and added that "we are very comfortable being the number fifth or sixth on first year premium, provided 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 the delay in attaining the breakeven point, he said investors in the business have a long-term outlook and added that the breakeven point had been deferred by a couple of years to 2011-12 from the initial target of 2009.
"When the company was set up, we were thinking of Rs 1,000 crore (Rs 10 billion) as capital... Today we have approved a plan of Rs 3,600 crore (Rs 36 billion), of which we have already deployed Rs 1,782 crore (Rs 17.82 billion). The entire funds would be deployed by March 2012," Sud said.
Pegging the growth of the company at about 65 per cent year-on-year since its 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 a smaller scale to a much larger scale."
