Future Generali Life, the private life insurer promoted by the Kishore Biyani-led Future Group, has undertaken extensive restructuring since April. That has seen its workforce reduced by a third and the closure of 30 per cent of its branch network.
According to sources, the downsizing is a direct fall-out of the slowdown in the business and the promoter's plan to sell stake in the life insurance business.
Sources indicate the company has abolished the positions of zonal heads and channel heads and significantly reduced the number of regional managers, area managers, branch managers and sales managers. There have been several exits at the senior management level, which includes the chief marketing manager, the head of the agency channel and others.
However, when contacted, Deepak Sood, MD & CEO of the company, played down the restructuring issue and said there was a natural level of attrition while adding it had been a conscious decision to focus more on quality than quantity.
“We have not been adding too many people of late and, hence, the employee count has come down since April. Besides, as a part of our restructuring plan, we have merged and downsized many of our loss-making branches,” Sood told Business Standard.
The insurer has reduced branches by 55 since April, to 125 from 180 on March 31. As on April 30, the total headcount stood at 2,750, compared to 3,150 a month ago, company data showed.
However, sources indicated the actual headcount would be significantly lower, as most of the people leaving were still serving their notice period. “Most of them have been given time till June 30 to find a new job. The actual downsizing will be more than 1,000,” sources said.
“Considering an 8-10 per cent average attrition rate in front line sales across the industry, a reduction of 350-400 in the headcount is not surprising. As part of the restructuring process, we are not filling up all the positions,” Sood added.
Future Generali Life is a joint venture (JV) between India's Future Group and Italian insurer Generali Group. Future Group, which owns 74 per cent stake in the company, is trying to come out of the JV by selling its stake to meet its debt obligation. The Italian underwriter owns the remaining 26 per cent stake, the maximum foreign direct investment (FDI) allowed in the insurance sector.
Future Generali Life currently ranks 17th among the 23 life insurance companies in the country in terms of new premium collection.
During 2011-12, it reported a 23.43 per cent decline in the premium collection at Rs 343.68 crore, compared to Rs 448.84 crore reported in the corresponding period of the previous year. In the same period, the total collection by the private life insurance industry was down by 17 per cent. The company is yet to break even since its inception in March 2008.
Amid a stringent regulatory and weak macroeconomic scenario, the uncertainty over an increase in the FDI limit has affected the industry in need for fresh capital infusion. The government has put on hold a proposal, pending for years, to raise FDI limit in the insurance sector, possibly until after the 2014 elections.