|  Chennai: S Sreenivasan, 40, chief financial officer, Bajaj Allianz General Insurance Company Limited, has reason to believe that the world is round. He started his career in 1986 as assistant manager, with the two-wheeler giant, Bajaj Auto in Pune before leaving to join Thermax DeVilbiss in 1988. In 1991 he left for Bahrain to join the National Insurance Group manager, finance and investments, and rose to assistant general manager. After a 12-year stint, Sreenivasan has returned to Pune in 2003 to rejoin the Bajaj group once again - but this time the group's non-life insurance venture.
According to him, managing funds in a life insurance company is a challenging task. "While one needs a long-term perspective, life insurance is mainly a combination of three operations - insurance, mutual funds (investment skills) and administration of long-term loans (collect premium over a long period and match assets and liabilities)." He adds, "The accountant should understand the actuarial science (statistical analysis to calculate insurance premiums) as well." That doesn't mean that managing funds in a non-life insurance company is an easy task. The liabilities are short-term but the finance executive should have a long-term perspective and see that the investments yield better returns. "At Bajaj Allianz General a large portion of our Rs500-crore investment kitty is parked in bonds and equity forms not more than five per cent of our investment portfolio." The duration of bonds, given the rising interest rates, is restricted to not more than four years. "Our target for investment income this year is Rs28 crore," he discloses. Excerpts from an interview : Could you tell us about the company's business figures till August 2004?
Till the end of August 2004, we had booked a total premium of Rs327.4 crore logging 79 per cent growth over last year. For the corresponding period in the previous fiscal our total premium earnings were Rs183 crore. The underwriting profit for the period is Rs15 crore. What was the premium mix this year since a major portion of your premium earnings last year came from motor insurance while marine-transit / hull insurance were negligible?
Compared to last year, the business mix this fiscal (upto August 2004) is more balanced. Motor insurance brought us Rs108.9 crore (last year Rs76.42 crore), fire Rs100.4 crore (Rs52.16 crore), marine-transit and hull Rs14.8 crore (Rs7.78 crore) and miscellaneous Rs103.3 crore (Rs46.68 crore). Our budgeted business mix is motor (42 per cent), fire (26 per cent), health (6 per cent), travel (4 per cent) and others (22 per cent). Speaking of our marine portfolio, we have booked a sizeable hull insurance premium. How did the company achieve the 79-per cent growth between last August 2003 and August 2004?
Compared to previous years, we saw a sizeable increase in the corporate business portfolio comprising fire, engineering and liability premium, which is growing very fast. We have entered the ship hull insurance business. Last year corporates contributed 40 per cent of the premium whereas this year it will be 45 per cent. Similarly we took a conscious decision to go retail. Segment-wise, the overall business mix will be 55 per cent in retail, and 45 per cent in corporate. Our policy renewal ratio is also on the rise. The overall renewal ratio is 65 per cent. The market acceptability of private sector is high amongst the corporates now. We have made inroads in government projects as well. Our net earned premium is high compared to other private players and that is what counts. In Pune we rank even ahead of some public sector general insurers. Last year the company has posted a net profit. Is it not the time to go for credit rating? You could also set the trend for other private players to follow.
We did have discussions with rating agencies. But many of the dynamics will change greatly once detariffing comes into effect. So when we go for rating we would like to get the highest rating. It should be noted that our reserving policy is quite conservative and our combined ratio is just 30 per cent. How are you geared up to face the detariff regime?
Our approach is to diversify the business portfolio and reduce the dependence on motor premium. On the pricing front, a three member actuarial team is doing work. We have a data warehouse. Today we can take location or risk-specific underwriting decisions. While your underwriting results show a positive figure now (Rs15 crore) how are you tackling motor claims - third party and own damage (accidental damage to the vehicle)?
In the case of motor third party claims we actively go for out-of-court settlements. Also our in-house surveyors survey more than 60 per cent of our own-damage claims. This in turn results in proper | 
