Union Bank To Sell Hdfc Standard Risk Products

Union Bank of India today signed a memorandum of understanding (MoU) with HDFC Standard Life Insurance Company Ltd for the selling life insurance / pension products of the latter subject to the Parliament approving guidelines for a corporate agency by amending the Insurance Act, 1938.

HDFC Standard Life intends to leverage Union Bank's wide network of 2,023 branches across the country.

To begin with, around 20 branches of the Union Bank in Mumbai have been identified for cross-selling life insurance products among the savings bank and fixed deposits holders. About 20 junior officers of Union Bank have been shortlisted for requisite training in selling insurance products. Union Bank will be selling only the life insurance products of HDFC Standard Life.

HDFC Standard has set a target of selling 25,000 policies translating into a sum assured of Rs 195 crore and garner Rs 12.5 crore by way of premium income by March 2002.

It has already signed an MoU with the Indian Bank with to capitalise the bank's strong network in the South. The insurance company is currently selling its products through its 13 offices, 1,600 consultants and 80 non-government organisations (NGOs). The company is eyeing rural areas through tie-ups with public sector banks and NGOs.

Meanwhile, the board of HDFC Standard Life has decided to invest in equities upto the maximum permissible limit of 15 per cent of its assets as prescribed by the Irda.

Deepak Parekh, chairman of HDFC Standard Life, said the 176-year old Standard Life had about 65 per cent of its assets invested in equities. He added, "We have started identifying the companies which are strong and that give good returns in the long-run."

He averred that real estate was a good investment avenue as monthly rentals were good source of cash flow streams.

Deepak Satwalekar, managing director and chief executive officer of HDFC Standard Life, said, "We expect Section 40 of the Insurance Act to be amended so that the commission payable to the agents comes down from the present level of 40 per cent of the first premium paid. This is to induce the agent and to keep the policy alive."

Meanwhile HDFC Standard Life Insurance Company is to see a capital infusion of about Rs 50 crore in October-November 2002 to meet business growth and also to comply with solvency margins required to be maintained.

The infusion will be on a pro-rata basis with HDFC pumping in 82 per cent of the requisite amountm, while Standard Life will chip in with the balance. The insurance company is curently capitalised at Rs 168 crore.