Wednesday, September 28, 2011

Most Trusted Brands 2011: LIC retains number 1 spot in life insurance category


From the year 2003 to 2007, LIC reigned supreme in Brand Equity's Most Trusted Brands Survey - in the services list of the survey - the insurance major was the numero uno service brand for five consecutive years. 

But call it a reflection of the market dynamics on-the-ground, the big daddy of life insurance in India slipped to No. 4 in the overall services list last year and is ranked No. 12 in the services list this year. The slip is owing to the rise of other service brands, particularly telecom services providers who have kept a scorching and an aggressive go-to-market strategy touching millions of lives across India. 

Telecom services and banks may have dislodged LIC from the overall list, but the company still rules the life insurance category. LIC is at No. 1 spot, followed by competitors SBI Life and Reliance Life at No. 2 & 3 respectively. LIC today has 78% market share in the life insurance space and services 28 crore individual policies besides covering more than 9 crore people under group insurance /superannuation schemes and more than 3 crore families under social security schemes. 

While LIC still dominates the category by a wide margin, there are clear indications that competition is hard at work to narrow the gap. The Brand Equity's Most Trusted Brands survey reveals that in the four zones, SBI Life comes a close second after LIC in the North zone. SBI Life also beats LIC as the most preferred life insurance brand in Chandigarh. Reliance Life Insurance is the other life insurance brand that has managed to beat LIC in the cities of Chennai, Bengaluru and Chandigarh. 

The brand has been quite visible through advertising recently and its efforts at improving distribution two years back through the introduction of the Chief Life Insurance Advisors (CLIA) scheme to leverage cream of its agent pool has also yielded positive results. In less than 24 months after CLIA was first introduced, LIC managed to get close to 15 lakh agents. 

The first year premium coming from just the CLIA scheme was so significant, that if the proceeds from CLIA were taken in isolation, it'll be the sixth largest amongst the 22 life insurance companies operating in India. For the year 2010-11, LIC earned Rs 203,358 crore as premium and settled a mind-boggling 183 lakh claims for the same time period paying Rs 52,160 crore. 

Monday, September 19, 2011

General insurance industry to reach Rs 90K cr by 2015


New Delhi: The general insurance industry is estimated to grow by over 18 per cent to reach a size of Rs 90,000 crore by 2015, industry chamber Assocham said.

The current size of the non-life industry is Rs 47,000 crore.
Motor insurance would continue to remain the largest category, contributing over 40 per cent of industry premiums, Assocham said in a statement.
"India will be one of the fastest growing markets in Asia and globally -- next only to China among major markets," it said.
India will become the third largest car market globally by 2020, with over 70 lakh cars sold annually, driving growth in motor insurance, Assocham said.
Besides, total expenditure on healthcare will be Rs 20 lakh crore, creating significant opportunities for coverage through health insurance.
"The health insurance segment will grow the fastest and account for close to 30 per cent of total industry premiums by 2015," Assocham secretary general DS Rawat said.
Within health insurance, the government sponsored health schemes will grow the fastest while retail will emerge as the largest opportunity, he said.
Further, with increase in infrastructure spending, there would be opportunities for insuring these projects as well.
In the next 5-year Plan beginning April 2012, investment is infrastructure sector involving road, port, railway and power is envisaged at USD 1 trillion.

Reliance Life gets IRDA OK for stake sale


Mumbai: The Anil Ambani Group's financial services arm Reliance Capital today said it has received in-principle approval from insurance sector regulator Insurance Regulatory Development Authority for its proposed 26 per cent stake sale in Reliance Life Insurance to Japan's Nippon Life.

The company has received in-principle approval from Insurance Regulatory Development Authority (IRDA) and final approval for the proposed sale would be granted upon receipt of RBI consent, Reliance Capital said in a statement.
"We are delighted to receive the IRDA approval and expect to conclude this transaction within the next few weeks," Reliance Capital CEO Sam Ghosh said.
Commenting on the development, Nippon Life Insurance President Yoshinobu Tsutsui said, "This is great news for both of us. We hope we will be able to close the transaction in the near future."
Earlier this year, Nippon Life had signed a definitive agreement for acquiring a 26 per cent stake in Reliance Life Insurance for Rs 3,062 crore.
This transaction pegs the total valuation of Reliance Life Insurance at around Rs 11,500 crore.
Nippon Life is a 122-year-old Global Fortune 100 company and the seventh largest life insurer in the world. It is a leading private life insurer in Asia and Japan.
R-Cap figures among the country's top-four private sector financial services and banking groups in terms of net worth.

LIC hikes stake in PFC to 5.01 pc


New Delhi: Life Insurance Corp has hiked its stake in Power Finance Corp (PFC) to a little over 5 per cent after purchasing additional shares worth over Rs 3.82 crore through open market purchases.

PFC, a leading lender for power projects, today said Life Insurance Corp (LIC) bought more than 2,64,667 shares or 0.020 per cent stake valued at over Rs 3.82 crore. With this transaction, which happened on September 5, LIC's total stake in the power sector lender has increased to 5.017 per cent.
The details were disclosed by PFC in a regulatory filing to the Bombay Stock Exchange.
Prior to the latest acquisition of shares, LIC had 4.997 per cent stake in PFC. Shares of PFC jumped three per cent to close at Rs 150.20 on the BSE.
PFC's product portfolio includes project term loan, equipment lease financing and consultancy services, according to its website.

LIC set to foray into venture capital biz


Mumbai: Diversifying its operations further the state owned Life Insurance Corporation (LIC), with over R12 lakh crore assets, has decided to participate in infrastructural debt funds (IDF) and to foray into the venture capital business.


While sorting out the technicalities with the segment regulator Insurance Regulatory and Development Authority (Irda) on infrastructural debt funds, the life insurance behemoth is launching a R500-crore venture capital fund.
Confirming the development, DK Mehrotra, acting chairman, LIC, said, “We will launch a R500 crore venture capital fund in the next few days, through our housing subsidiary LIC Housing Finance, with a focus on infrastructure.”
VK Sharma, chief executive officer, LIC Housing Finance (LICHFL), said the LICHFL venture capital fund, to be headed by Arun Goel,would raise the money over a month from banks, high net worth individuals and institutions.
“The venture capital’s focus will be to invest primarily in urban real estate and infrastructure. If the need arises, we may look at partnering with someone in future.’’
On the infrastructural debt fund Mehrotra said, “We want to participate, but the regulator has to agree to our picking up a stake of more than 10%. We are in talks with the regulator to be able to more.”
Mehrotra said LIC has not been able to fulfil its mandated 15% investments funds in the infrastructure sector having invested only 13% during 2010-11 due to lack of opportunities.
The finance ministry which finalised the guidelines for IDFs in June this year, allowed IDF to be set up either as a trust regulated by capital market regulator Securities and Exchange Board of India (Sebi) or as an non-banking financial company (NBFC) regulated by Reserve Bank of India.
A trust-based infrastructural debt fund would normally be a mutual fund. LIC has three subsidiaries — LIC Mutual Fund , LIC HFL and LIC Pension Fund.

Govt to bend rules for Reliance Life?


New Delhi: Government is thinking about relaxing equity dilution norms for insurers.

The government is likely to soon relax the norms for dilution of equity stake by Indian promoters of insurance companies, a move that will pave the way for Reliance Life to sell a 26 per cent stake to Nippon of Japan.
The proposed order will help remove the ambiguity of Section 6AA of the Insurance Act. The ambiguity came to light when Reliance Life announced its plans to go for a public offer in 2009, but could not obtain regulatory approval as it had not completed 10 years of existence.
"We will soon issue a circular which will enable insurance firms to dilute promoters' stake though permissible means before 10 years of operations," official sources said.
Section 6AA of the Insurance Act, 1938, stipulates that a promoter holding over 26 per cent in an insurance company, including re-insurance, will be required to divest their stake and bring it below this threshold limit in a phased manner "after a period of 10 years from the date of the commencement of the said business by such Indian insurance company or as prescribed by the central government".
This provision does not apply to the foreign promoters of insurance firms, as per the explanation of the section.
Sources said even the Law Ministry is of the view that there are no regulatory hurdles if promoters of life and general companies and re-insurance firms dilute their stake before the 10-year period stipulated in the clause.
With the enabling provision, insurance firms can dilute their stake anytime, sources said.
ADAG-promoted Reliance Life came into existence with the acquisition of AMP Sanmar in 2005. AMP Sanmar started operations in January, 2002, which implies Reliance Life would complete 10 years of operations in January next year.
Insurance for USD 680 million (about Rs 3,060 core), subject to regulatory approval.
In March this year, Japanese insurance firm Nippon Life Insurance Company agreed to acquire a 26 per cent stake in Reliance Life 
The transaction pegs the total valuation of Reliance Life Insurance at approximately Rs 11,500 crore (USD 2.6 billion).
As per the current rules, a foreign entity can hold up to a 26 per cent stake in an Indian insurance firm.
Nippon is the sixth largest life insurer in the world and the No 1 private life insurer in Asia and Japan.

Govt to bend rules for Reliance Life?


New Delhi: Government is thinking about relaxing equity dilution norms for insurers.

The government is likely to soon relax the norms for dilution of equity stake by Indian promoters of insurance companies, a move that will pave the way for Reliance Life to sell a 26 per cent stake to Nippon of Japan.
The proposed order will help remove the ambiguity of Section 6AA of the Insurance Act. The ambiguity came to light when Reliance Life announced its plans to go for a public offer in 2009, but could not obtain regulatory approval as it had not completed 10 years of existence.
"We will soon issue a circular which will enable insurance firms to dilute promoters' stake though permissible means before 10 years of operations," official sources said.
Section 6AA of the Insurance Act, 1938, stipulates that a promoter holding over 26 per cent in an insurance company, including re-insurance, will be required to divest their stake and bring it below this threshold limit in a phased manner "after a period of 10 years from the date of the commencement of the said business by such Indian insurance company or as prescribed by the central government".
This provision does not apply to the foreign promoters of insurance firms, as per the explanation of the section.
Sources said even the Law Ministry is of the view that there are no regulatory hurdles if promoters of life and general companies and re-insurance firms dilute their stake before the 10-year period stipulated in the clause.
With the enabling provision, insurance firms can dilute their stake anytime, sources said.
ADAG-promoted Reliance Life came into existence with the acquisition of AMP Sanmar in 2005. AMP Sanmar started operations in January, 2002, which implies Reliance Life would complete 10 years of operations in January next year.
Insurance for USD 680 million (about Rs 3,060 core), subject to regulatory approval.
In March this year, Japanese insurance firm Nippon Life Insurance Company agreed to acquire a 26 per cent stake in Reliance Life 
The transaction pegs the total valuation of Reliance Life Insurance at approximately Rs 11,500 crore (USD 2.6 billion).
As per the current rules, a foreign entity can hold up to a 26 per cent stake in an Indian insurance firm.
Nippon is the sixth largest life insurer in the world and the No 1 private life insurer in Asia and Japan.

LIC hikes stake in Tata Steel


New Delhi: Life Insurance Corporation of India (LIC) has bought 9.4 lakh shares in Tata Steel from the open market, hiking its holding in the steel-making firm to a little over 14 per cent.

In a communique to the Bombay Stock Exchange (BSE), Tata Steel said that following the acquisition of additional shares on August 12, LIC currently holds 13.49 crore shares, or a 14.06 per cent stake, in the firm.
LIC had a 13.97 per cent stake in Tata Steel before the latest transaction, it said.
As of June-end, Tata Steel's promoters, including Tata Sons, held a 30.60 per cent stake in the company.
Shares of the company were trading at Rs 472.1 apiece at around 1430 hours on the BSE today, up 0.68 per cent vis-a-vis their previous close.
Company INFO

AUM of life insurers cross Rs 15 lakh cr


New Delhi: Total assets managed by life insurance companies went up by 11.38 per cent to cross Rs 15 lakh crore mark in the first quarter of 2011-12.

As many as 22 life insurance companies had assets under management (AUM), including equity and fixed income assets, of Rs 15, 04,629 crore in April-June 2011 quarter, data compiled by industry association Life Insurance Council said.
The AUM of these players was Rs 13,50,850 crore at the end of the June quarter, 2010.
The increase in AUM is helped by a record 13 per cent rise in renewal premium income to Rs 37,221 crore during April-June quarter 2011. Renewal premium of these companies was Rs 32,959 crore in the same period last year.
"This means increasing number of policy-holders are renewing their respective policies, indicating that the policy-holders are taking an informed decision...," it said.
However, the total premium income of the companies declined by 5.18 per cent to Rs 55,523 crore from Rs 58,559 crore in the year ago period.
Also, the industry's new business premium income declined 28 per cent to Rs 18,282 crore during the quarter under review against Rs 25,522 crore last year.
The council's data further revealed that the number of life insurance agents declined to 24.27 lakh from 28.16 lakh in the year ago period.

Tuesday, September 13, 2011

The year long campaign-cum-celebrations of AIIEA's Diamond Jubilee Year by the ICEU, Chennai Division-I, came to a fitting finale with a 'Family Get Toghter' programme on August 31, 2011 attended by a huge assembly of employees, their family members and senior leaders from both life and general sectors. Conducted after a long period of preprations and mobilization, the event went down as memorable one in the history of the union. The participation of comrades chandersekar bose, the doyen of the LIC employees' movement and founder leader of the AIIEA, K.Venugopal, General Secretary of AIIEA, besides other leaders gave a momentous fillip to the occasion. The programme was conducted in the Bertram Hall located in the sprawling Loyola College campus in Chennai, which witnessed decorations with arches, flags and festoons.  There was also an Exhibition of photographs, posters and caricatured items of cartoons, etc in the premises.
At 3.00 p.m., various competitions were held in which the employees and their children took part enthusiastically. Some items like anthakshari and quiz programmes were conducted on the dias inside the hall.
While Com.G.Jayaraman, President,ICEU, Chennai Division-I presided over the main function, the welcome address was delivered by Com.K.Vijayalakshmi, Joint Secretary, ICEU. Inaugurating the meeting, Com.K.Venugoapl, recounted the series of programmes conceived and implemented right from the formation of AIIEA in the year 1951 including the first demand for nationalization of the insurance industry, its campaign for protection of the public sector insurance industry including the irrefutable evidence tendered before the standing committee of Parliament against the retrograde insurance Amendment Bills and  the fight against the move to split the LIC and its achievements like persuading the LIC to recruit 5000 class IV employees through regularization of temporary employees and also recruit 5000 Assistants, its co-operation to upgrade technology with a view to improve policyholders' servicing, etc. He concluded by asserting that the AIIEA derived its strength from the unit achieved at the Base, Divisional, and Zonal levels.
Com.Chandersekar Bose, in his brief address, proudly recalled the 60 years of glorious march if the AIIEA since its formation, its first demand for nationalization resulting in the coming into being of the LIC in the year 1956 taking over all the liabilities of private insurers, its achievements on standardization of salaries, industrial DA, bonus, pension and several other benefits for the employees through successive struggles, He also referred to the continuous publication of insurance worker journal by the AIIEA, which, he was sure, would march forward ensuring a decent living for the employees.
Com.K.Swaminathan, General secretary, SZIEF, said that the AIIEA, the largest trade union in the industry, planted the seed for the birth of the LIC as an institution. The organisation's first demand was not for enhanced wages, but on nationalization, he averred. The AIIEA is now engaged in the unenviable task of protecting the  LIC in public sector through intensified campaign and struggles and at the same time doing its for improving the servicing of policyholders telling the employees that the campaign starts from their tables, meaning thereby that better clients' service would be of  immense help to the movement and struggles. He expressed his happiness that the LIC was and is free from any complaint of corruption in its dealings with the policyholders and others because of the role played by the AIIEA in ensuring corrupt-free servicing.
Greeting the participants on the occasion, Shri.D.D.Singh, Zonal Manager, LIC, South Zone, Chennai, said that during its long march, the AIIEA had ensured by and large a satisfied mass of employees, who had extended maximum co-operation to the management on all counts. He concluded by expressing the hope that both LIC and the AIIEA would go hand in hand in the future too to safeguard the interests of the institution, its  employees and its clientele.Then there was a cultural programme participated by the women comrades and the tiny tots with an informative skit, spirit-raising songs, pleasing instrumental music, inspiring dances, etc., which gave a stimulus to the occasion. Prizes were distributed to all those who came out successful in the various competitions and participants in the cultural programme.The whole proceedings on the dais were very effectively compeered by comrades R.Nirmala and com.S.Manjula. Com.S.Revathi, convenor, women's sub committee, chennai division-I was on the dais throughout the programme helping the orderly conduct of the events. Com.S.Ramesh Kumar ,General Secretary,ICEU, proposed a vote of thanks.The day wore off with a sumptuous dinner for all those present on the historic occasion.