ICICI Prudential revenue up 3-fold at Rs 808 cr

Private insurance company ICICI Prudential Life reported an over three-fold jump in net profit at Rs 808 crore for the financial year ended March 31, 2011, helped by cost control exercise and client persistency.

During the fiscal, the company's new business premium income grew by 24 per cent to Rs 7,862 crore. Total premium income was Rs 17,881 crore, a rise of over 8 per cent.

"Effective cost and persistency management as well as commitment to growing profitably has enabled us to report profits for the second consecutive year. Effective use of technology was a key catalyst in ensuring profitable growth and helped us deliver a better product proposition to customers," ICICI Prudential Life MD & CEO Sandeep Bakhshi said.

The company's assets under management (AUM) increased by over 19 per cent in FY'11 to Rs 68,150 crore. This includes an equity corpus of Rs 43,325 crore.

"We have delivered strong results despite the structural changes witnessed in the industry on account of the new regulatory norms," he said.

The key drivers of delivering this profitability have been continued focus on expenses and persistency, ICICI Pru said in a statement.

E-Insurance launched by Kotak Life Insurance

The options for those looking to fulfill insurance needs on their own are widening. Kotak Mahindra Old Mutual Life Insurance launched its online term insurance product this month. As the company doesn’t incur expenses to reach out to a customer to sell the product, including the agent’s commission, it is priced 10% cheaper than the term insurance cover available during the company’s agents and distributors.

The buying procedure is almost related to the rest of the online products namely ICICI Prudential Life Insurance iProtect Term Insurance and Aegon Religare Life Insurance’s iTerm plan. While ICICI Prudential and Aegon Religare Life Insurance offer only yearly options of payment, Kotak has monthly, quarterly, half-yearly and yearly options of payment.

The maximum age at maturity under ICICI Prudential’s iProtect is 75 years, 65 years under Aegon Religare’s iTerm, but 70 years under Kotak Life’s e-insurance.

The company also offers a facility of tele-underwriting wherein customers are asked questions and in case answers are acceptable, then no medical tests are required. For sum assured of `30 lakh, no tests or tele-underwriting is valid. If you need medical tests, you will have to go to the hospital to get the tests done. Rest of the documents are picked up from your residence.

Though Kotak Life Insurance and ICICI Prudential offer a maximum term of 30 years, Aegon Religare Life offers a maximum term of 25 years. The premium for the lower term is higher for Aegon Religare than the other two players in the non-smoker category.

But is lower than the Kotak premium in case of a non-smoker. Aegon Religare does not differentiate between a smoker and a non-smoking female, while deciding the premium. Kotak Life actually prices premium for smokers higher than any of the online players.

Unique Option: One feature offered here is the step-up life cover, where you are in a position to pay higher premium and realise you need a higher sum assured, you can opt for it. However, there are charges for taking the step-up option, which is dependent on the premium and the term.

In case the policy is taken for less than 15 years, then you have to pay 3% of the basic premium, while 5% of the basic premium is levied in case the term is above 15 years.
No medical tests are required if you opt for the step-up option.

Why Go For it?: If you are a non-smoking woman, then the online term cover of Kotak Life is the cheapest in the market.

Why Not?: The policy pegs risk for smoking customers much higher than other similar options. Premium for smoking men and women is higher by 7-26% vis-à-vis other players.

LIC demands top offer value for ABB

Life Insurance Corporation (LIC) is nudge Swiss engineering firm ABB to raise the open offer price made to public shareholders of its Indian support, in which the insurer holds 16.3(%) per cent. ABB has presented to buy 4.9 crore shares in its domestic arm at Rs 900 respectively through the open offer closing on July 27, to move up its stake to 75(%) per cent from 52(%) per cent currently.

In a unusual request of India’s largest institutional investor playing an objector for public shareholders, LIC, which has mostly been a inactive investor so far, has asked ABB to raise the open offer price to Rs 950-1,000 per share, according to a basis privy to the subject.

“Tomorrow (Friday) is the last day for the company (ABB) to modify its (open offer) price. We will take a sight based on the revision, if any,” a top LIC official told ET on Thursday, requesting mystery.

In reply to a query, ABB’s spokesperson said, “As a matter of principle, ABB does not comment on market rumours.”

If ABB manages to induce LIC to give up all its shares in the open offer, the Swiss parent will hold around 65(%) per cent in ABB India. But, it is not clear whether LIC will surrender all its shares in the open offer, which opened on July 8. LIC holds the shares in ABB crossways various schemes. Other key public shareholders in ABB include Aberdeen Asset Managers, which holds 3.55(%) per cent, ICICI Prudential Life Insurance Company —1.5(%) per cent and General Insurance Corporation of India —1.4(%) per cent.

Bankers said a buyer can raise the price prior to the last 7 days of the open offer’s close. “If LIC has managed to push ABB to this phase, it looks like it is serious about getting a high price for the venture, but you never know,” said a top official with a domestic investment bank.

ABB shares on Thursday closed flat at Rs 869.85 in a feeble market. It is still at a 3(%) per cent discount to the open offer price of Rs 900. The decision by ABB to buy back shares of its Indian arm on May 17 came when the stock was reeling under selling demands after ABB dissatisfied the market with its January-March quarter results. The company posted a 91(%) per cent dip in net profit in the quarter, exhausted down the stock by 16(%) per cent in two weeks. ABB’s announcement to buy back shares boosted the share price by 29(%) per cent.

Share buybacks are careful by investors as a signal by the parent that its stock is worth at least the open offer price. The logic is promoters know best about the company’s prospects. Promoters usually use share buybacks to arrest a slide in their stocks or to boost them.

Riders, add-ons to develop basic policies

Quite rightly named, insurance riders are tag-along policies that ride along with the essential life insurance. Riders are offered by mainly insurance companies, and add a few benefits to your life policy. Riders are planned to simply supplement your basic life insurance policy. Riders are, of course, optional, and just a way to improve benefits beyond those offered by your regular policy.
Note the key points about riders. One, they come with their own premiums in count to the premium you pay on your base life policy. Rider premiums are based on a fixed sum per thousand of the sum assured.
For example, in Reliance Life Insurance New Critical Conditions Rider, a 35-year-old male will have to pay Rs 5.06 per thousand of sum assured for a 10-year rider period.
Two, riders cannot be bought on their own, and have to be close to a regular life policy. However, riders and premiums may have differing periods of insurance and do not have to be the same as the life policy you have selected.
Three, once the benefit of the rider is availed of, they cease to be prepared, and you will not have to pay out the premiums.
For example, considering the afore-mentioned Critical Conditions rider, you can claim repayment for multiple surgeries and even in the same year, but only to the extent of the benefit stated in the rider terms.
Even if the rider is ended, your actual life plan remains unchanged, and will continue as it is.
Riders are available on life insurance policies, ULIPs or else. With child benefit plans, retirement plans, and pension plans, some providers do offer riders where others do not. For example, ICICI Prudential offers riders on its life insurance policies, but not on most of its retirement policies.
While the finer points of riders differ with providers, most primarily offer benefits on accidental deaths, disability (or a combination of the two), critical illnesses and surgeries and waiver of premiums.
Some providers offer all of these, but accidental death and disabilities benefits are consistently offered.
Accidental death rider simply provides additional cover in the case of death only due to an accident. There are a good many circumstances on what exactly
constitutes an accidental death, so be sure to take a careful look. Similarly, disability covers partial and permanent disability.
As far as critical illnesses go, the insurance providers specify those that they will cover. Within the specific illnesses as well, there are further terms and conditions that have to be satisfy, such as stage of the disease and soon.
Major surgeries are also provided for under some riders.
The third common rider is waiving of premium. This is an offshoot of disability, under which, should you be permanently disabled and thus be unable to meet premium payments, this rider will clear you of having to pay the premiums on your actual policy.

ICICI Prudential pips SBI Life to become biggest private insurer

ICICI Prudential has pipped SBI Life to recover the top location among private insurance players, garnering new business worth Rs 303 crore as 1st year premium in April this year.

ICICI Prudential collected Rs 303 crore as first-year premium in the first month of the present financial, compared to Rs 135 crore in the equivalent month last year, according to monthly data released by IRDA.

On the other hand, SBI Life, promoted by the country's biggest lender, State Bank of India, earned a first-year premium value Rs 185 crore compared to Rs 460 crore a year in the past.

In 2009-10, SBI Life emerged as the largest player. The insurer collected Rs 7,041 crore as first-year premium, while ICICI Prudential managed to wash up an Rs 6,334 crore premium in the last financial.

Overall, in April this year, the life insurance industry registered a increase of 60(%) per cent in new business compared to the corresponding month previous year.

The 23 life insurers communally mopped up a first-year premium of Rs 5,746 crore in April next to Rs 3,601 crore in the same month of the previous year.

The growth is important, as there is turf war between market regulator SEBI and insurance watchdog IRDA over regulation of ULIP products, which account for more than half of the total business of life insurance companies.

The difference between SEBI and IRDA arise when the previous banned 14 life insurers from raising money from market-linked insurance schemes (ULIPs) in April, following which the last asked the companies to ignore the order.

Subsequently, the Finance Ministry intervened and the two regulators decided to equally seek a legally compulsory mandate from the court as to who has jurisdiction over ULIPs.

Till then, position quo ante was restored by the Finance Ministry.

After the agreement, SEBI amended its order and banned only new ULIPs launched after April 9, when the first order of SEBI was issued.

In April this year, the biggest insurer Life Insurance Corporation's first year premium stand at Rs 4,173 crore, compared to Rs 2,113 crore in the matching month last year, translating into a growth of around 100(%) per cent.

The market share of LIC has also increased to above 72(%) per cent throughout the month, compared to around 58(%) per cent in the same period of the previous year.

In the first month of the current financial, the 22 private insurers together could mop up first-year premium of just Rs 1,572 crore, compared to Rs 1,488 crore in the year-ago, time, translating into a increase of over 5(%) per cent.

BoR contract to provide a raise to insurance arms of ICICI

ICICI Bank’s proposed acquisition of Bank of Rajasthan will expand the distribution reach of ICICI Prudential Life Insurance and ICICI Lombard General Insurance — subsidiary of ICICI Bank.

Shares of ICICI Bank fell by 7% per cent on Wednesday, as investors nervous that the bank had overpaid for acquiring Bank of Rajasthan. On Monday, the bank had indicated an exchange ratio which reflected an 89% premium on Bank of Rajasthan’s market price. Bank of Rajasthan’s price rose 20% to Rs 119.

Bank of Rajasthan presently distributes insurance products for Aviva Life Insurance and United India Insurance. Existing guidelines of the Insurance Regulatory and Development Authority (Irda) do not permit a bank to distribute products of more than one life insurance and one general insurance company.

According to industry sources, the loss of Bank of Rajasthan as a sharing partner will not make a significant dent on the sales of Aviva. Unlike the new generation private banks which have a big wealth management team that is active in selling thirdparty products, BoR sales were more in the form of referrals.

This is the second time that Aviva is losing a bancassurance partner, following an M&A activity. Earlier the insurance firm, which had partnered Centurion Bank of Punjab, lost a big chunk of business after the HDFC Bank-CBoP merger. “Bank of Rajasthan’s distribution capabilities are no where close to that of the erstwhile CBoP and it is unlikely that Aviva will be affected,” said an industry official.

For ICICI Bank, however, BoR provides a significant distribution opportunity. The old generation private bank has close to 500 branches and a large number of savings accounts. “Going by what happened in Bank of Madura (another old generation private banks acquired by ICICI Bank), I expect that BoR will be completely included into ICICI Bank’s IT network soon,” said a banker on condition of anonymity.

There is a proposal with Irda to allow banks to distribute products of multiple companies. However, insurance companies say even if there is a relaxation, banks may be allowed to sell policies of 2-3 life companies.

“It is unlikely that banks will be allowed become a virtual broking firm, offering products of all companies as it would be very difficult for employees to understand the features of so many products,” said a banker.

ICICI Prudential may trade Tata AIG stake to Tatas

Prudential CEO Tidjane Thiam today indicated that the British company would sell its stake in Tata AIG Life to the Indian corporation. In March, Prudential had acquired AIG's Asia business for $35.5 billion, which included the 26(%) per cent stake in Tata AIG.
Prudential, which has a 26(%) per cent stake in ICICI Prudential Life Insurance, the country’s largest private sector life insurer, is barred from acquiring stake in another life insurance venture. As a result, it has no option but to sell the stake. Thiam said Tata has the first right of refusal on the shares.
A Reuters report said Tata and Prudential were in advanced stages of talks on the price at which the shares would be sold to the Indian conglomerate.
However, Tata AIG spokesperson could not be reached for comment. While announcing a $21 billion rights issue, the insurer said that it would sell assets to “enhance value for shareholders” and meet the requirements of regulators in China, India and Malaysia.
Thiam said, Prudential will sell a 50(%) per cent stake in AIA’s Chinese business, which has a rooted value of $1.2 billion, and a alternative stake in its Malaysian unit.
Over the last two months, the Tata group has offered no comments on the stake achievement in the life insurance venture. Market sources do not rule out the possibility of the Tatas roping in another partner later.
Earlier, a Tata group executive had told Business Standard that a partner may be inducted later.
Most Indian players, which ventured into the insurance arena, had roped in a foreign partner. While Sahara has so far not roped in a foreign partner, Anil Dhirubhai Ambani Group is looking at different options, including roping in an investor in Reliance Life.
The Prudential-AIG deal covered the life venture with the Tatas but the general insurance venture was outside the ambit of the transaction as the US insurer held the stake through a separate investment outfit.
Tata was among the initial set of players to foray into the insurance sector after the business was opened up to private companies in 2000. Two days after AIG announced its decision to sell the Asian life insurance venture, AIG India executives held detailed discussions with Insurance Regulatory and Development Authority officials.

Insurance business grows 18% in FY10 led by 31% increase of LIC

After two months of muted growth, the industry's March 2010 WNRP grow 1.5 xs M-o-M to Rs126.4b helped by a strong 1.8x M-o-M increase to Rs69.2 billion for LIC. For private players, March 2010 WNRP grew 1.2x to Rs 57.20 billion M-o-M. On an encouraging base, on a Y-o-Y basis WNRP grew by 42% Y-o-Y to Rs 126.40 billion. LIC reported WNRPgrowth of 55% and private players reported WNRP growth of 28% Y-o-Y. For FY10, the industry WNRP grew 18% Y-o-Y to Rs 578 billion led by 31% Y-o-Y growth of LIC to Rs 283 billion.
Strong growth by big private companies: In March 2010, private players reported strong WNRP growth on a Y-o-Y and M-o-M basis led by strong growth by large players like ICICI Prudential Life Insurance (up 72% Y-o-Y and 97% M-o-M), SBI Life Insurance (up 36% Y-o-Y and 1.8x M-o-M), Reliance Life Insurance (up 68% Y-o-Y and 1.6x M-o-M) and HDFC Standard Life (up 18% Y-o-Y and 33% M-o-M). For FY`10 WNRP for SBI Life Insurance grew significantly (37%) against private playersgrowth of 8%. Reliance Life Insurance grew in line with private players. HDFC Standard Life grew slightly higher than private players. Other large private players` growth was flat to negative at 20%.
Private players FY`10 market share declines to 51% against 56% in FY09: Due to strong growth by LIC, private player’s market share declined to 51% from 56% a year earlier. In FY10, ICICI Prudential Life Insurance`s market share declined to 17.7% (19.3%), Bajaj Allianz`s market share declined to 11.1% (13.9%) and Birla Sunlife Insurance share declined to 7.8% (9%). SBI Life Insurance increased its share to 14.4% (11.3%). Reliance Life Insurance and HDFC Standard Life improved their market shares marginally to 10.9% (10.8%) and 8.7% (8.5%) respectively.

Many Ulips propose life cover of 50 time’s annual premium

While unit-linked insurance policies (Ulips) of life insurance companies have come under disapproval for their focus on investment rather than offering sufficient life cover, insurers point out that a number of ULIP offer very much high humanity benefits that can be as high as 50 times the annual premium or still higher in a few select instances.

The minimum sum assured (life cover) in Ulips is 5 times and most policies offer cover of between 5-10 times the annual premium. The life-cover multiple could also be the term of the policy or otherwise what is called as sum-assured several.

HDFC Standard Life offers up to 40 times life cover on all its Ulips, Aegon Religare Life’s Protect Gain and ICICI Prudential Life Insurance Lifetime Maxima offer up to 50 times humanity cover. Met Life Insurance’s Met Smart Life offers life cover up to 100 times the annual premium. Typically, in an Ulip, the higher the risk cover, the higher the mortality charges are and therefore the lower is the amount invested in equities.

Akshay Gupta, chief marketing officer, Bajaj Allianz Life Insurance, said, if a person buys an Ulip for investment point, they go for a low life cover multiples, which ranges from 5-15 times the annual cover. Those who look for extra humanity cover and at the same time also expect a certain quantity of money at the end of the term, go for high multiple life covers. He added “Unlike the general awareness, such policies are meant for retail customers and these are our bread and butter policies that are popular among our customers”.

Bajaj Allianz generally offers life cover in multiples of the term of the policy. However, some of its policies such as New Family Gain II and Unit Gain offer life cover up to 85 times the annual premium.

KS Gopal Krishnan, chief financial officer and appointed actuary, Aegon Religare, said, high multiple life cover products are made for retail investors, who have liabilities such as home loans, child’s education and marriage.

However, some experts believe Ulips are not the best options for higher life cover up to multiples of 50-60 times.

Rahul Agarwal, CEO, Optima Insurance brokers, said, when there are cheaper options available in terms plans, why would someone go for Ulips to get higher life cover? He added “People invest in Ulips because of the return on equity investments and if one opts for higher life cover, the investment section becomes limited and so do the returns.”

Pru Ace launches by ICICI Prudential Life

ICICI Prudential Life Insurance Company Ltd (ICICI Prudential Life) on Tuesday announced the launch of ICICI Pru Ace – a low charge, wealth making product.
The particularly low charge configuration of the product ensures that the customer gets an unbeatable rate of return over the tenure of the product, said the company.

Pranav Mishra, SVP & Head - Products & Sales, ICICI Prudential Life Insurance, said, “Ace delivers a significantly superior value proposition to the customer as there is 100% allocation of the customer’s funds. Our latest fund offering, the Dynamic P/E Fund is an added new fund option that our customers can utilize to create long term wealth creation.”

ICICI Pru ACE rewards customers who have a long term point of view through loyalty additions as well as additional allocation of units as under additional allocation of units: more than 100% allocation to funds on the premium payment from the 6th policy year onwards.

There is no premium allocation charge which results in results in 100% allocation of the customer’s funds at the time of premium payment. The policy administration charge is fixed at Rs. 60 per month for the term of the policy.

This negligible charge structure results in a very high NET YIELD for the customer.

The company has also launched a Dynamic P/E Fund along with this product that provides long term capital appreciation through dynamic asset allocation between equity and debt.
For More Information About Life Insurance
ICICI Pru Pinnacle

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.