MetLife may increase its stake in PNB MetLife. As per the MD&CEO Sameer Bansal, MetLife plans to increase its stake in PNB MetLife beyond the current 49.73% whenever the right opportunity comes.
He said MetLife wants to increase its shareholding, but the final decision will be taken by the shareholders.
PNB MetLife India Insurance Co. Ltd. is one of the leading life insurance companies in India. Majority shareholders are MetLife International Holdings LLC (leading global insurance company) and Punjab National Bank (second largest bank in India based on no. of branches).
Life Insurance Market
Around 95-96% of the life insurance business in India is still driven by savings products. However, demand for protection (term insurance) is also growing.
Five to six years ago, most customers wanted insurance cover of ₹5 lakh, ₹10 lakh, or ₹20 lakh. Today, many customers are looking for much higher cover, ranging from ₹1 crore to ₹5 crore.
Challenges in Protection Insurance
Bansal said protection insurance has not grown faster because of three main reasons.
The first reason is pricing. Apart from the premium, there are other costs such as stamp duty and solvency-related expenses. Regulatory support can help reduce these costs and make insurance more affordable.
The second reason is customer onboarding and underwriting. Insurance companies need to make the buying process easier while preventing fraud. Technology is helping insurers assess customer risk more accurately and quickly.
The third reason is capital. Protection products require a large amount of capital, making them more expensive for insurers.
Retirement Business is Growing
Bansal said retirement is a major opportunity for the insurance industry.
At PNB MetLife, retirement and annuity products contributed around 9% of the business last year. Their share has now increased to 17%.
He said Indians not only face the risk of dying early but also the risk of living longer. Since many people do not have a strong pension or social security system after retirement, retirement planning has become more important.
Insurers Have an Advantage in Annuities
According to Bansal, retirement planning has three stages:
- Building savings
- Managing investments
- Receiving regular annuity income after retirement
Insurance companies have a unique advantage in the annuity stage because they are the only financial institutions allowed to provide lifelong annuity payments.
However, competition is strong in the savings stage, where mutual funds and the National Pension System (NPS) offer products with lower charges. Insurers therefore need to stand out through better investment performance and consistent long-term returns.
Balanced Product Portfolio
Bansal said PNB MetLife has a well-balanced product mix.
Around 25% of its business comes from ULIPs, nearly 50% from non-participating products, about 25% from participating products, and around 5% from protection products.
He said the company is satisfied with this mix because relying too much on ULIPs may not be good for long-term profitability. Going forward, the company wants retirement and protection products to contribute more.
Balanced Approach Towards Market-Linked Products
Bansal said demand for market-linked products remains strong. However, because of market volatility over the past year, the company has focused on maintaining a balanced portfolio.
The company does not restrict sales but advises customers and distributors based on changing market conditions. It wants customers to have realistic expectations instead of getting carried away by market optimism.
Improving Profitability
Bansal said PNB MetLife is still a mid-sized insurer and is not among the top five companies in the industry.
He said retirement products generally provide better profit margins. The company has also focused on reducing costs, improving business quality, increasing policy renewal rates, and maintaining low claim and surrender rates.
The company’s policy persistency has reached around 84%, while early claim and surrender rates are among the lowest in the industry. These improvements are expected to further improve profit margins.
Future Plans
Retirement and protection insurance will remain the company’s biggest focus areas.
PNB MetLife is working on new retirement products, including variable annuity products, which are not yet widely available in India. The company is also investing heavily in technology and retirement-related services.
Distribution Network
Bancassurance remains the company’s largest distribution channel and contributes around 65% of its business.
Punjab National Bank alone contributes around 45% of the company’s business.
Apart from PNB, PNB MetLife has partnerships with 23 other institutions, giving it access to more than 20,000 branches across India.
The agency channel contributes around 20% of the business. The company currently has nearly 40,000 agents and increased its branch network from about 152 branches to 182 during the past year.
Online and direct channels contribute around 3% of the business, but the company believes these channels have strong long-term growth potential.
Industry Reforms
Bansal said the insurance industry is waiting for clarity on the final commission framework.
If commissions become more effort-based and channel-specific, insurance companies may need to design different products for different distribution channels because the cost of selling varies across channels.
He said the overall goal should be to reduce costs and pass more benefits to customers through better pricing and improved services. He is optimistic that these reforms will make insurance more customer-friendly and affordable.
MetLife’s Investment Plans
While many insurance companies have not increased foreign ownership to the permitted limit of 74%, MetLife has gradually increased its stake in PNB MetLife to 49.73%.
Bansal said the company plans to increase its shareholding further whenever suitable opportunities arise. He added that India continues to be an important strategic market for MetLife.
However, there is no fixed timeline for increasing the stake, and the final decision will be made by the shareholders.
