Reliance Life mulls venture sale to increase Rs 1,500 cr

Anil Ambani-promoted Reliance Life Insurance is understood to be in talks with global Insurance players, as well as Swiss Re, to raise an expected Rs 1,500 crore by selling 10-15(%) per cent venture.
“Reliance Life Insurance is looking to pass on 10-15(%) per cent stake to raise an estimated Rs 1,500 crore and is talking to various players, including Swiss Re,” investment banking sources in know of the development said.
As per the current rules, a foreign thing can hold up to 26(%) per cent stake in an Indian insurance firm. Reliance Capital totally owns Reliance Life, a business it acquired from AMP Sanmar in 2005.
A Reliance Life representative could not be contacted, while KwokChoi Wong Director Communications Swiss Re (Asia Division) said “Swiss Re does not comment on market rumours”.
For nearly a year, Reliance Capital has been planning either an intial public offering or strategic sale of its Life Insurance business to unlock value for shareholders.

HomeShop18 offers Bajaj Allianz Life Insurance Products

HomeShop 18, India’s only on air shopping channel, started by the Network 18 group, today announced its tie up with Bajaj Allianz, one of India’s leading insurers to venture into distribution of insurance services on its channel. This is the first of its kind program in India where insurance services would be available to customers through TV. It also marks the increase of HomeShop 18’s corporate portfolio which will now include services. In the special shows, HomeShop 18 anchors are joined by experts from Bajaj Allianz to offer two new products, specially chosen for the viewers of HomeShop 18 - Bajaj Allianz InvestGain (Life insurance plan) and Bajaj Allianz Family CareFirst (Healthcare plan). The first show went on air on 18th March’10 (Thursday) at 11.30 a.m and got an awesome response from the audience.
Commenting on the new launch, Mr. Sundeep Malhotra, CEO, HomeShop18, said, “We are getting a good response from our viewers since the show went on-air. We are doing away with all the common perils that, till date, have been attached to selling insurance. Our approach is fresh, stylized and non interfering. Viewers get in-depth information on the products– the benefit, advantage and features, at a time they want to see it, in the comforts of their homes, enabling the consumer to make an informed decision on which policy to buy.”

Elaborating on why the home shopping platform is an ideal way to reach customers, he added, “HomeShop 18 has bought appreciation to the home shopping industry in India and our offering of India’s top brands clearly reflects the success of our channel and the value of this medium. As part of our growth plans to expand our offerings, a service was a natural progression for us. Insurance selling on home shopping channels is a huge hit in markets abroad and the success of the first show is giving us positive signals.

Akshay Mehrotra, Head – Marketing, Bajaj Allianz said, “Bajaj Allianz is always looking for original touch points to attract and service customers, and home shopping is surely a non-conventional distribution model. We chose simple products like Bajaj Allianz InvestGain and Family CareFirst to be offered through HomeShop 18 so that viewers can easily understand their features and benefits when explained by our experts on the show. HomeShop 18 is a unique platform that enables us to reach out to the viewers at their convenience and comfort and explain the nuances of buying insurance, which many other mediums do not allow.”

HomeShop 18 had recently tied up with GS Home Shopping, world’s 3rd largest home shopping network. GS Shopping captured a heavy market share retailing insurance in Korean markets with a business of USD 464mn. The insurance team at HomeShop 18 would make use of GS Shopping expertise in various verticals, it being their forte.
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Pay insurance by way of Visa cards

Visa Debit and Credit card holders will now be able to pay their insurance premiums in a much easy way. As many as 20 insurance companies have tied up with Visa so as to allow premium payment for both life insurance and general insurance policies.
The companies participating in this tie up are Aegon Religare, Bajaj Allianz Life Insurance, Bajaj Allianz General, Bharti AXA Insurance, Birla Sunlife, Future Generali, HDFC Ergo, ICICI Lombard, ICICI Prudential Life Insurance, IDBI Fortis, ING Vysya, Kotak Life Insurance, Max New York Life, Metlife, Reliance General, Reliance Life, Royal Sundaram, SBI Life, Tata AIG General and Tata AIG Life Insurance.
Visa said. Customers having policies with these companies can now pay their premiums online using during the website www.visabillpay.in or the participating insurance company websites.
Previously the modes of premium payment available were check pick up, cash/ cheque etc.
Other than the internet there are other facilities too that are covered in the process. Customers can make payments over the phone through the call centers of their insurance companies or can teach their banks to make regular payment of their premiums through their Visa cards.
The insurance companies will be benefited as their operational good organization would increase due to timely receiving of insurance premiums. The other benefits that would be achieved by the insurance companies are reduced managing costs due to automated payment process. Thus the customer service would be increased and so would his observation.

Axis may purchase 5% in Max New York Life

Axis Bank, the country’s third largest private sector lender, is in talks to buy a 5(%) per cent venture in Max New York Life Insurance for approximately Rs 200 crore.
This would value Max New York Life at shut to Rs 4,000 crore. It is getting into a banc assurance arrangement with Axis, through which the company’s insurance policies would be sold during the bank’s branches from May.
When asked, a representative for Axis said, “We do not have any comments to propose on the specifics of our strategic business initiatives.” Max’s representative refused to comment.
Max was among the first players to enter the life insurance arena when the sector was opened in 2000 and was ranked eighth in terms of total premium income in the period between April 2009 and February 2010. It had a market share of 1.9(%) per cent.
The deal comes within months of Hemendra Kothari, the former chairman of DSP Merrill Lynch, acquiring Ambuja Cements’ 11.5(%) per cent stake in ING Vysya Life Insurance for Rs 190 crore. The deal had valued the company at Rs1, 650 crore.
The Anil Dhirubhai Ambani Group is looking to shed venture through a mix of private placement and public offer in its life insurance venture, Reliance Life Insurance, to step up the increase of the business.
Sources said Axis zeroed in on a stake in Max New York Life after looking around for other opportunities. The deal had been in the works for a while but both the bank as well as the insurer without the development when Business Standard sought comments earlier.
In October last year, Axis’ Managing Director and CEO Shikha Sharma had told Business Standard the bank was not keen on manufacturing insurance products. She was the MD & CEO of the country’s largest private sector life insurer, ICICI Prudential Life Insurance Company, before she joined Axis last July.
Sharma, however, appeared keener on foraying into health insurance, which she had said was a “more open area”. Max India-promoted health insurance company Max Bupa is set to formally launch operations next month.

Life insurance biz report 28% increase in new premiums

After a blip in January, the life insurance industry rebounded to record a 28(%) per cent growth in fresh business premium in February, data compiled by the Insurance Regulatory and Development Authority showed. While Life Insurance Corporation of India managed to produce its fresh premiums by 32(%) per cent, the new business of private companies grew by 22(%) per cent.
The January-March quarter accounts for nearly 40(%) per cent of the total sales of the insurance industry. However, in January, post the cap on ULIP charges, the agents had taken time to adjust to the changes and as a result, sales had been adversely affected. In the same month, the life insurance industry's fresh business premium had posted a negative growth of 38(%) per cent, dragged down by the presentation of State-run LIC.
In February, most of the private players were able to post a double-digit growth. However, ICICI Prudential Life Insurance, Birla Sun Life Insurance and Max New York Life were not able to better last year's growth.
According to the February data, LIC was able to maintain its market share at 62(%) per cent.
In the 11-month period (April-February), the life insurance industry posted a 16.5(%) per cent growth. While LIC has developed at 24(%) per cent, private players grew by 5(%) per cent in the period under consideration.

Thumbs up: Happy days are now over again

A strong rebound in the domestic economy has ensured that the third seasons of the Indian Premier League (IPL) will nearly dual the sponsorship revenues of each of the eight team-owners compared to last year.
Team sponsorships, which on an average fetched Rs 24 crore for each team owner last year, is set to garner average revenue of Rs 40 crore this year.
Sources, who did not wish to be recognized, said that the Mumbai Indians are set to fetch the highest revenue of Rs 48 crore this year.
IPL organizers and team owners have carved out new slices of revenue, monetizing every prospective source from Internet, movie theatres, mobile phones and even the "strategic time out" sessions.
From merchandise sales to team jerseys and kits, insurance, chewing gum deals and radio and flying partners, team owners have managed to extract revenue from every possible source.
For instance, private life insurance company HDFC Standard Life has announced its second year of association with the Rajasthan Royals. Under the terms of agreement, HDFC Standard Life is the associate sponsor in the third season of the IPL.
It also plans several actions in the coming months with the Royals and some of them include financial planning sessions for young players in the team.
The association also leads to lots of other on-ground initiatives.
The other team owners have worked out parallel sponsorship deals.
The revenue earned from each of these deals will be channelised into the central revenue pool, a proportion of which is given away to the team owners in what is basically a pre-determined formula.
For instance, industry sources said tyre major MRF is dishing out Rs 16 crore for the blimp at match venues while Maxx has inked a Rs 20 crore per annum deal as the strategic time out partner.

Private insurance firms have extra death claims than LIC

Private sector insurance companies have extra than three times the outstanding number of death claims on individual insurance policy compared to state-owned Life Insurance Corporation of India (LIC), Finance Minister Pranab Mukherjee told the Rajya Sabha on Tuesday.
Replying to additional during Question Hour, he said the outstanding number of death claims, as on March 31, 2009, as a percentage of total number of claims intimated to the companies in 2008-09 stood at 7.75(%) per cent for private companies.
The same for public sector LIC was 2.21(%) per cent, he said. For group policies, private sector companies had 3.93(%) per cent outstanding claims while LIC had 0.24(%) per cent.
Mukherjee said private sector insurance companies started operations eight years back while LIC has been in business since 1956.

‘Insurance to develop at 3-4% in next 3 years'

The insurance industry is projected to grow at three to 4(%) per cent in the next three to four years, according to Mr Rajesh Sud, Managing Director and Chief Executive Officer, Max New York Life.
He said, At present, the insurance division contributes to 4(%) per cent of the GDP in India, while in developed countries, it is as high as eight to 10(%) per cent.
He said. “According to our estimates, there are around 12 crore households who can come under the cover of life insurance. Around 28(%) per cent penetration is there, which means there is still wonderful scope for the industry to grow.”
Life insurance companies sold 3.82 crore new policies up to January 2010 against 3.62 crore in the corresponding period last year, according to Mr S.B. Mathur, Secretary-General, Life Insurance Council. “New business premium grew by 15.32(%) per cent year-on-year to Rs 75,347 crore from Rs 65,337 crore. Private companies also showed a positive growth and collected new business premium of Rs 26,327.81 crore up to January 2010.”

Wealth Plus from LIC appears crash-challenging

Investors have seen the wonderful returns generated by ULIPS in the past 5-6 years, but are wary of a crash of the likes witnessed post Lehman Brothers collapse in October 2008. LIC’s latest offering, Wealth Plus, is an 8-year fixed-term product, where LIC guarantees the highest Net Asset Value (NAV) recorded over the first seven years of the policy. Such products have been introduced by several other private life insurance companies and have done well after the financial crisis.

Wealth Plus has two options — a single premium one and another plan where premium is payable for the first three years. The minimum annual premium is Rs 40,000 under the single premium option and Rs 20,000 under the 3-year premium paying term. The sum insured is a modest 1.25X the premium for single premium policies and 5X the annualized premium for policies with a 3-year payment term. The insurance cover continues for two years after the term of the policy.

According to the illustration provided by LIC, a 30-year old who invests a single premium of Rs 40,000 can look forward to getting back Rs 64,679 if the fund value appreciates 10% annually. If the appreciation is 6%, he can expect to get back Rs 47,377 at the end of eight years. On the other hand, if the same investor chooses to invest Rs 20,000 for the first three years, he can look forward to getting Rs 91,445 if the fund appreciates 10% and Rs 70,309 if the appreciation is 6%.

You can get surrender benefits only after the achievement of the third policy anniversary both under single and 3-year Premium Paying Term contract. The surrender value will be the policyholder’s fund value at the date of surrender. There will be no surrender charge. You can also avail of the partial withdrawal facility.

Analysis
Every investor knows the trade-off between risk and reward. But few know about the cost embedded in a guaranteed return. For most investors, guaranteed and assured returns are music to their ears, particularly when they have gone through a bout of volatility in the market.

In short, the working behind such products is that the highest NAV is assured by shifting assets to debt as timed by the fund manager. The downside is that the fund managers cannot allow spikes in the scheme’s NAV.

Par panel for raising smallest capital of LIC to Rs 100 cr

A parliamentary panel has favoured raising the minimum paid-up capital of state-owned Life Insurance Corporation from Rs 5 crore to Rs 100crore, a move which will bring it on par with private insurers.

The Standing Committee on Finance, however, wanted the government to make it clear that any further increase in the capital beyond Rs 100 crore must also be infused by the government only, instead of the insurer raising it through public offers. It had submitted its report recently in Parliament.

At present, private insurers have to maintain a minimum paid up capital of Rs 100 crore before they get licence as per the Insurance Act, 1938.

However, LIC minimum capital requirement is Rs 5 crore, sought to be increased by Rs 95 crore through the amendment to the Life Insurance Corporation (Amendment) Bill, 2009.

The panel also asked the government to further amend the bill for allowing LIC to raise money through debt and preferential capital. The amendment in its current form restricts LIC to raise capital only by equity, leaving aside these other forms of generating funds.

The committee, headed by BJP MP Murli Manohar Joshi, said, "Rising of the paid-up capital of LIC in line with the provisions of the Insurance Act, 1938 and as applicable to the Life Insurance companies in general May, perhaps is appropriate."

Bajaj Allianz Life Insurance garners premium of Rs 502 cr

Bajaj Allianz Life Insurance, one of the leading private life insurers has garnered new business premium income of Rs. 502 crore under the ‘guarantee product’ portfolio. Bajaj Allianz Life Insurance has recently launched 3 products viz. Bajaj Allianz Invest Plus, Bajaj Allianz Max Gain and Bajaj Allianz Shield Plus, which promised “guaranteed benefits”.
The various guaranteed benefits that the various products offered were –
* Bajaj Allianz Invest Plus – a traditional product which had the intelligibility of ULIPs guaranteed 7% return for the current financial year 2009-10. The guarantee return would be declared at the beginning of each financial year based on the performance of the fund
* Bajaj Allianz Max Gain – ULIP product which guarantees the highest NAV recorded for the entire policy period of 10 years and the NAV is monitored daily.
* Bajaj Allianz Shield Plus – a single premium 10-yr term ULIP product guarantees a return of 170% in a special fund – Shield Plus Fund.
The company used innovative media to propagate the concept, besides TV and Radio advertisements. An innovative roadshow - “Guarantee Express” was devised in 137 cities, which educated people on the concept of guaranteed returns as well as protection of their investments in a volatile market. The campaign was innovative as it was for the first time in the insurance industry that street theatre was used to communicate the concept and the products. Till date, the Guarantee Express has been held at over 130 cities across the country.
Akshay Mehrotra, Head-Marketing, Bajaj Allianz said, “Customers today are looking for products which offer guarantees and market participation along with upside advantages. Our current marketing initiatives are aimed to reach out to customers who preferred such products. We used our extensive distribution network of 1200 branch across 1000+ towns and almost 2 lac agents to create awareness of such benefits. Marketing campaigns with support of TV, Print and innovative guarantee express campaign helped to educate customers about products with guarantee from our company.”
The ‘Bajaj Allianz Guarantee Express’ will be running till 9th March 2010, visiting prominent areas in each city, wherein the plays will be performed to bring out the ‘guarantee’ aspect of each of the products. The 360-degree activation includes radio activities in the city where the bus will be visiting along with TV advertisements on the theme.

INFORMATION ABOUT TERM PLANS

This is one cover that you must chase your agent for and not the other way round. First, let us believe the alternatives to term insurance.

One option is to ensure that you have sufficient assets that generate enough returns to make up for the loss of your salary. The second alternative is that you live in a joint family structure where your relatives will take care of your family.

In present times, neither is really a possible option. Considering that Term Insurance rates have fallen by over 50% since liberalizations, there is no reason not to buy term cover. There is also no reason for not buying term cover in your 20s.

And if you do not find an agent, there is always the online option. Aegon Religare’s term cover, which is the cheapest one in the market, is only available online.
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Tata to buy AIG's venture in life insurance division

A day after Prudential bought out AIG’s Asia arm, AIA, top executives of both AIG and Tata AIG met the Insurance Regulatory & Development Authority (Irda) to keep the latter abreast of developments

Sources at Tata Sons told Business Standard they had decided to buy out AIG’s stake in the Life Insurance business. And, would consider inducting a partner at a later stage.
In another meeting, senior executives of Prudential and the ICICI group discussed the implications of the takeover on their Indian Insurance venture. According to people familiar with the matter, Prudential unbreakable its commitment to the group. Barry Stowe, chief executive officer of Prudential Corporation, Asia, was present in the meeting.
By Irda data, while ICICI Prudential had around 7 (%) per cent market share in total premiums at the end of January, Tata AIG Life had only 1.23(%) per cent share.
The whole work out started after Prudential bought AIG’s Asia arm yesterday for $35.5 billion. AIG had to sell stake to repay the US government who had bailed out the US insurer at the time of financial downturn.
Tata AIG Life Insurance is the ninth largest insurer in the Indian market. The company recorded 13.7(%) per cent increase in the total premium income between April 2009 and January 2010. The insurance regulator is still working on the merger and achievement guidelines.

LIC to agree to realty projects across India

Life Insurance Corporation of India (LIC) would take on realty projects, both commercial and residential, across the country.

Stating that LIC was the second biggest real estate asset holder in the country after the Railways, besides being the largest sponsor, Chairman of LIC T S Vijayan said that LIC was looking at a real estate income of Rs 200 crore to Rs 300 crore.

He said LIC was at a premium income of Rs 1, 76,000 crore during the current financial. To a doubt, he said that LIC was aiming at 18 per cent to 19 per cent growth in the next financial.

The insurer would be investing Rs 2 lakh crore in the current financial, out of which 15 per cent would be in infrastructure projects.

Laying the foundation stone of a residential housing complex in south Kolkata on Sunday, Finance Minister Pranab Mukherjee said that LIC was contributing to 4(%) per cent of the country's GDP as well as paying heavy dividends to the exchequer.
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