Magma HDI General Insurance Company has turned profitable in the seventh quarter of its existence beating its own guidance of achieving break-even in the fourth quarter of this financial year. The insurer, which commenced business in October, 2012, made a net profit of Rs 1.7 crore in April-June period.
The insurance company is a joint venture between Kolkata-based financial services firm Magma Fincorp and German insurer HDI-Gerling Industrie Versicherung. Magma Fincorp currently holds 74 per cent stake in the company, while the remaining 26 per cent share is with HDI-Gerling.
"I don't know about any other insurance company in India that has become profitable within such a short time. The insurance company has benefitted from the group's synergy. It has utilised Magma's branch network to market its products instead of opening too many branches on its own. Also, it has been selling products to Magma's existing customers. This resulted in better cost control and efficient claim management and helped the company achieve break-even ahead of expectation," V Lakshmi Narasimhan, chief financial officer at Magma Fincorp, told Business Standard.
Magma Fincorp has 275 branches across 21 states and one union territory. The company's customer base is estimated at around 450,000.
Magma HDI General Insurance earned a premium income of Rs 107 crore in the first three months of this financial year. On an average the company is adding 15,000-16,000 customers every month. "We are targeting premium income of Rs 500 crore in the current financial year compared to Rs 422 crore in 2013-14 (April-March)," Narasimhan said.
He ruled out any immediate plan to dilute Magma Fincorp's stake in the insurance joint venture. The company is also adequately capitalised to finance its business growth for at least next three years, he added.
Separately, Narasimhan said Magma Fincorp, which had applied for a universal banking licence, is not too keen to set up a small bank or a payments bank. "Based on the draft guidelines, we don't think we will opt for this model. But we will await the final guidelines from the Reserve Bank of India (RBI) before taking a final decision," he said.