HDFC Ergo sees capital infusion of Rs 80 cr

Private sector general insurer HDFC Ergo is likely to see a capital infusion of around Rs 80 crore in the next one-and-a-half years to support business growth.

"We may need a capital infusion of around Rs 25-30 crore in the current fiscal, as around Rs 75 crore has already been infused into the insurance firm. Similarly, we will require around Rs 50 crore in the next fiscal," chief executive officer Ritesh Kumar said here.

Promoters of the general insurance firm, namely premier mortgage lender HDFC and Germany's Ergo International, have already pumped in around Rs 75 crore in the first half of this financial year. The firm has an equity capital base of Rs 500 crore as of now, he said.

Kumar said the company would not require huge capital from the promoters in future as it had turned profitable on entity level from the last quarter.

"We don't need large support from the promoters, as the growth can be funded from internal accruals," he added.

HDFC Ergo posted net profit at Rs 14 crore in the April-June quarter and is expecting to retain profit for the whole year. "We hope that profitability will be sustained in the rest half of the year," Kumar said.

On the premium front, the general insurance firm has set a target of 35-40 per cent premium growth for this year.

"We had a premium collection of Rs 1,300 crore in the last fiscal and we aim to have 35-40 per cent growth in premium in the current fiscal," Kumar said, adding the insurer witnessed 44 per cent growth in premium collection in H1 of FY12.

HDFC Ergo draws around a third of its revenue from accident and health insurance segments, a third from motor insurance and the rest from corporates. "Growth in all segments is good. However, there are issues relating to third party motor pool, which is a concern for all general life insurance companies," Kumar added.

$100 mn cover for Formula 1 Grand Prix

Insurance excludes instruments, cars and drivers, already covered globally.

As India’s date with the Formula 1 Grand Prix approaches, JPSI, the organiser of the world’s biggest and fastest single-seater motor-racing tournament, has sought an insurance cover of $100 million (around Rs 490 crore) for the event.

JPSI or Jaypee Sports International Ltd is a subsidiary of Jaiprakash Ltd (JAL).

The total cover includes two policies: the first is a $15 million event cancellation policy mainly covering for loss of revenue on account of cancellation of the event due to reasons beyond the control of the organisers. HDFC Ergo is likely to underwrite this.

The second policy, to be provided by Reliance General Insurance Company, is a $85 million terrorism and third-party liability cover. Apart from any terrorist activity, it covers third-party liability risks like personal accident covers for ground crews, instruments of the organisers and property damages.

Roughly 70 per cent of the risk has been reinsured to global reinsurance majors. ACE Insurance Brokers Ltd advised on the reinsurance deal.

The total premiums were expected to be in the region of Rs 7-10 crore, said a source close to the development.

The General Insurance Corporation of India (GIC Re) was ceded 10 per cent of the risk. Twenty per cent of the risk would be retained by the insurers while the remaining would be reinsured by the global players,” the source added. GIC Re is the designated reinsurer in the country.

Since the instruments, cars and drivers are already covered under the annual global policy by respective team owners, the total coverage for the racing extravaganza is lower than other marquee sports events in India like the Indian Premier League (IPL) and the ICC Cricket World Cup 2011. While the World Cup 2011 took a cover of Rs 600 crore, the total sum insured for IPL-4 was around Rs 900 crore, which included a Rs 450 crore cover against terrorist attacks.

The maiden Formula 1 race in India is scheduled from October 28-30 at the Buddh International Circuit in Greater Noida near Delhi and Jaypee Group is the main sponsor of the event. The three-day event includes three practice sessions, one qualifying session and the final race. The 60-lap race will start at 3 pm on October 30 in the 120,000-capacity racing circuit.

Formula 1 is known for some exotic covers, especially for the leading drivers. For instance, last year, two-time Formula One World Champion, Ferrari driver Fernando Alonso, had his thumbs insured for nine million pounds (almost Rs 64 crore)!

Twelve participating teams would fly in 24 racing cars, engines, tyres and pares in separate jets. The other equipment includes radio sets, high-tech gadgets, TV equipment, computers, etc.