HDFC Standard Life to cut costs before public offer

Mumbai-based insurer HDFC Standard Life Insurance has said it wants to rationalise expenses and enhance business before it hits the capital market in 2010-11.

"We are now focused on getting the fundamentals of our company right," Vibha Padalkar, chief financial officer (CFO) of the insurer, told IANS.

HDFC Standard Life, a joint venture between India's Housing Development Finance Corp and Britain's Standard Life Insurance, had last year posted a net loss of Rs.502 crore, up from Rs.243 crore the year before.

The company's costs relating to its insurance business jumped to Rs.1,622 crore in 2008-09 from Rs.993 crore in the previous fiscal, while the ratio of management expenses to gross premium went up by 9 percent to 29 percent.

According to Padalkar, the expenses went up because of the large scale investments the company made in manpower, infrastructure and marketing segments.

"Due to the slowdown, we did not reap benefits from these investments during the year. We hope to see this year some benefits of the investments made last fiscal," she said.

Padalkar added that additional funds raised by the company will be used to manage expenses and override the capital strain.

Favouring a standard formula for calculating the embedded value for easier comparison with peers, Padalkar said the company plans to declare its embedded value next year.

Embedded value for a life insurer is the present value of the future profits in their policies.

"We have not started disclosing our embedded value. We might do so in the coming calendar year," Padalkar said said.

Last updated on Nov 18^th, 2009 at 18:19 pm IST--IANS