Aviva to double FPAs to 31,000 in 2007

Cairo (Egypt), Nov 5: Private insurance player Aviva Life Insurance, the Indian arm of UK-based Aviva, has said as part of its aggresive expansion plan for 2007, it will ramp up its Direct Sales Force to 31,000 Finance Planning Advisors (FPAs) from the current 14,000, besides adding 91 branches to its existing network.

The insurer, which has a 26 per cent stake in Dabur India, also announced its tie-up with six more co-operative and regional rural banks in Maharashtra, Bihar, Andhra Pradesh, Gujarat, West Bengal and Jharkhand, growing from its present 23 bancassurance relationships, of which 16 are with cooperative and regional rural banks, while the remaining are with private banks.

These tie-ups will enable the company to access 43.5 million bank customers through a 310 bank branch network. At present, cooperative banks contribute 0.2 per cent of Aviva's total bancassurance business.

''We are currently growing at 131 per cent year-on-year, and have already exceeded our set targets and plans. We will beat our fourth quarter (ending December, 31) targets as well,'' Aviva India MD Bert Paterson told reporters on the sidelines of the Aviva Summit held here.

The company's bancassurance division accounts for almost 70 per cent of its total business, while the Direct sales force segment contributes to the remaining business.

On how the funding of the expansion will work, Mr Paterson said, ''I cannot divulge any details on the investment pattern, as that is calculated as part of our financial planning in the beginning of the year, though it has already been agreed upon between Dabur and us in the prescribed 74:26 ratio. We will meet this expansion through capital infusion and not through debt, '' he added.

Aviva's paid up capital till September this year amounted to Rs 559 crore. The company pumped in an additional Rs 139 crore in January this year and another Rs 100 crore in June, and does not have any plans to pump in any more money for this year.

''We have already infused Rs 559 crore till now and do not have any further plans of capital infusion till December this year.

However, we will be infusing more capital in January-February next year,'' the MD said.

At present the company has 101 branches spread all over the country and will add 91 branches to its existing portfolio spread across various regions of India by the middle of next year, taking the total to 192.

The company will also more than double its Annualised Premium Equivalent (APE), which comprises 100 per cent of its regular premium in addition to 10 per cent of the single permium from its new businessess, to over Rs 600 crore next year. Last year, the company reported an APE of Rs 313 crore.

''Our APE for the period January to September stood at Rs 516 crore, and going by our current growth rate of 131 per cent, we are optimistic about crossing the Rs 600 crore mark by the year-end,'' Aviva India Marketing Director Vivek Khanna said.

The six new bancassurance agreements Aviva India has announced are with Janaseva Sahakari Bank (Maharashtra), Patliputra Central Co-operative Bank (Bihar), Kakinada District Central Co-operative Bank (Andhra Pradesh), Dena Gujarat Gramin Bank (Gujarat), Bardhman Gramin Bank (West Bengal) and Ranchi Kunthi DCCB (Jharkhand).

With these additions, Aviva now has a total of 29 bancassurance partnerships.

On the increase of FDI in the insurance sector from the present 26 per cent to 49 per cent, Mr Paterson said, the current capital invested by private insurers is Rs 6,543 crore, while the capital of insurers with a foreign partner is Rs 5,994 crore, without including Reliance and Sahara Life, who do not have foreign partners.

If a 49 per cent cap on FDI was allowed and Indian promoters sold their stake to foreign players, total capitalisation will remain at Rs 5,994 crore, while FDI will be Rs 2,937 crore, which is an additional capital of Rs 1,414 crore.

While denying any plans to enter the non-life insurance sector which offers huge potential in India, he said the company's focus for the Indian market will continue to be on life and pension plans.

The company's primary business comes from Unit Linked Insurance Products (ULIP), and in total it has 11 ULIP products in all.

''As of now we have no plans to offer any new products, but as and when the need arises, we will definitely look at adding to our existing portfolio,'' Mr Paterson said.

Aviva also has plans to expand its BPO business in India. It currently employs 7,500 people in this space spread across its operations in Noida, Pune and Gurgaon. The MD refused to divulge any further details on that front.

UNI