Max New York Life, one of the earliest entrants into the private insurance market, grew 54% on new business premium in the first nine months of the current fiscal. It has also gone for major expansion last year. Rajesh Sud, the CEO and managing director of Max New York Life, who took charge four months ago, spoke to DNA Money's Nandini Goswami on a host of industry and company specific issues. Excerpts from the interview:

How has the current slowdown affected MaxNYL's business and how do you see the situation unfolding in the coming months?

Growth has definitely been impacted. But MaxNYL's premium numbers, considering annualised premium, have grown by 41% on a year-on-year basis in April-December compared to a negative 8% slide for the industry. The private space grew by 11% on this count during the same period. Our growth in number of policies sold in the same period is 69% against 20% in the private sector. Going forward, there would be a moderate growth and industry numbers would be a flattish; a lot would depend on fiscal policies and election results over the next couple of quarters. I think the third quarter of the new fiscal would see some re-emergence of growth. For MaxNYL, we would be happy to sustain the growth rate, although it could be difficult. We ended with a gross premium of Rs 3,654 crore in March 2008, which was a 60% growth over the previous fiscal.

How have you managed to score high on premium numbers in the first nine months? And going forward, why would a consumer go in for an insurance policy as a priority?

Over the last 8 years we have believed in a business model with a clear focus on a multi-channel distribution system, a well-balanced footprint, diversification of products and focus on long-term selling. True, these are difficult times, but I think that insurance plans should be the first to invest in and the last to exit. We've focused a lot on getting to consumers during these difficult times. In the last three months, we've retrained agents and asked them to get in touch with clients. This has worked very well with customers, who were looking at some kind of a reassurance. Need-based selling or a face-to-face interaction is very important.

Any plans to enter into guaranteed space with most insurers betting on this category. And would you be working on premium flexibility?

We have no plans to come up with policies which offer guarantees against equities. We feel over a period of time, there is an inherent fear of a possible conflict of ideas between the customer and the insurance company on guarantees. And thankfully, as a strategy we never came out with plans which offer flexibility in premiums between the first year and successive years.

Are you going slow on expansion plans this year given the slowdown?

Last year, we revved the number of our offices to 350. We now have 570 offices at 375 locations. We have certain internal benchmarks on productivity and once we hit those, we would expand further. But this year we would try to fill up the capacity, which we invested in last year.

What about new policies over the coming months?

We are working on variants within the health space and may close the year with lakh policies in this category. MaxNYL may bring in Universal Life with the safety of capital guarantees, an international product from the NewYork Life stable. We may also introduce some more fund options as well.

Any plans to introduce your innovative product Max Vijay nationally?

Rather than a product, Max Vijay is a new business model, which has done very well on pilot basis. We have tie-ups with microfinance institutions in Uttaranchal and NGOs in Andhra Pradesh apart from using government channels in Delhi. There are plans to scale up this low-premium product and fine-tune the model this year. We are tying up with Reliance Retail to sell this product apart from neighbourhood FMCG and retail stores. Ideally, we will sell this product nationally in a phased manner.

With the insurance regulator recently bringing down factors on solvency across traditional and unit-linked plans, would MaxNYL save on capital? And any plans to infuse capital this fiscal?

Not much, but with the present paid-up capital being Rs 1,782 crore, the changes could release around Rs 70 crore over 3 years. In December, we infused Rs 350 crore of capital. It is hard to predict whether additional capital would be needed, it depends on how well sales do.

With competition mounting, are you worried about market share?

Not at all, in fact our market share grew to 6.5% in the private insurance space. And given the size of the Indian economy and no social security system, there is scope for more players.

With a host of American insurers going through difficult times, what has been New York Life's point of view on India?

Last week the New York Life CEO had come to India. He was upbeat and called the Indian company a centre of excellence. Around 25% of New York Life's revenues come from outside the US. Asia comprises a significant chunk of this.

Nandini Goswami / DNA-Daily News & Analysis Source: 3D Syndication