NEW DELHI: Private sector life insurer, ICICI Prudential Life on Wednesday announced launch of health insurance product, Crisis Cover, which will provide health as well as cover against 35 illness. The product is unique because it offers the widest coverage against critical illnesses, total and permanent disability and death over long-term, making it a comprehensive critical illness plan available in the country, ICICI Prudential Life Insurance Managing Director Shikha Sharma told reporters here. "Rapid progress has the unfortunate side effect of increased stress and other factors have led to an increase in the incidence of illnesses, particularly lifestyle diseases. For many, financial constraints keep them from accessing appropriate health care and we believe that the product is ideally positioned to bridge this gap," she said. Available in two options, the 35 conditions under the scheme includes angioplasty, brain surgery, coronary artery bypass surgery, kidney failure, heart attack, major organ transplant and stroke. The policy can be taken by any healthy individual between 18-60 years and the term can be chosen up to 75 years of age. The sum assured under the plan can be between Rs 3-20 lakh. The insurer last week had infused Rs 300 crore fresh capital taking the total base to Rs 2,372 crore for meeting the solvency norms and incur high up-front expenses. During the the first quarter of the current fiscal, the insurer registered a 22 per cent growth in premium income from new business at Rs 987 crore as against Rs 812 crore in the corresponding period previous fiscal.
Source:Economic Times
Wednesday, August 1, 2007
IRDA benchmark for realistic valuation of insurance cos soon
NEW DELHI: Insurance regulator, Insurance Regulatory & Development Authority (IRDA), plans to introduce a new benchmark for insurance companies’ valuations. The new measures will help in arriving at more realistic estimates based on disclosures. Realistic valuations are crucial to the industry which could become a hot-bed for mergers and acquisitions (M&As) if and when there is an increase in the foreign direct investment limit. A sub-committee has been set up by IRDA to suggest ways to value these companies. The Embedded Value (EV) method, which is an indicator of the value of the existing business in the books of a company, is one of the measures suggested by the committee. At present, the New Business Achieved Profit (NBAP) is used for valuation purposes. “Though it is still early for the insurance industry in India, EV, as a concept, will have to be eventually adopted by companies,” IRDA chairman CS Rao said. In the absence of a standard valuation method, the industry feels that some of the valuations being bandied about may not be justified. While EV is an indicator of the value of the business in terms of policies already written, the NBAP multiplier is the value of the business that will be written in the future. NBAP is arrived at after various assumptions about the future, but it may not give pointers to the quality of the portfolio of the company. “The sub-committee appointed under IRDA has recommended embedded value as one of the measures for the valuation of insurance companies. The committee first studied the European Embedded Value (EEV). Changes have to made in the way we disclose our numbers. It is true that at present, the valuation figures doing the rounds may have used bold multiples as far as NBAP is concerned. EV together with NBAP will be a more balanced way to evaluate a company,” said Bert Paterson, managing director, Aviva Life Insurance. Most foreign promoters of insurance JVs have already insisted on moving towards the EV concept. These are norms prevalent in their parent companies worldwide. “When the FDI is hiked to 49% — valuations will gain importance. The remaining 23% needs to be valued on a fair basis,” Mr Paterson added. Sanket Kawatkar, senior analyst, Watson Wyatt, a global consulting firm, said, “ For a new start-up, if the past record of business growth is impressive, one would expect the value of the company to be driven more by its future growth potential — the `structural value’ rather than the value of the business already on the books which is EV.” But the estimation of future business may not capture the true risks undertaken by the company, and therefore, provide a true indication of the underlying value that can be expected by the business to be sold in the future, he added.
Source:Economic Times
Source:Economic Times
Indian Insurance cos to launch services in Saudi
DUBAI: Two Indian insurance companies -- Life Insurance Corporation of India (LIC) and New India Assurance have entered into a contract with Saudi Arabia's Al Hokair Group to make their services available in the kingdom. Saudi India Company for Cooperative Insurance (SICCI), formed out of the venture, has recently issued an initial public offering (IPO) for 40 per cent of the shares and raised SR 40 million as per Saudi regulations that require new insurance companies to offer 40 per cent of the shares to locals before starting operations. LIC along with its subsidiary, LIC International, holds 20.4 per cent stake in SICCI, while New India Assurance has 10.6 per cent stake in the company and Al Hokair Group holds 29 per cent stake. "The Saudi India Company for Cooperative Insurance is a composite insurance company that will sell both life and non-life products. The IPO was very well received. The matter is now with the ministry of commerce of Saudi Arabia and by July or August end we hope to get the license as it is now only a procedural formality," a senior LIC official said. In November last year, LIC (International) BSC (C), Bahrain - a subsidiary of Life Insurance Corporation of India in Bahrain - got the permission to sell insurance policies to the public in Bahrain from the Central Bank of Bahrain. LIC started its Bahrain operations in 1989. LIC (International), Bahrain operates in Bahrain, Saudi Arabia, Oman, Qatar, UAE and Kuwait, and has permission to sell insurance only to non-resident Indians.
Source:Economic Times
Source:Economic Times
ICICI Pru may offer health cover with fixed premium
ICICI Prudential Life Insurance, the country’s largest private life insurer, is looking at introducing a level premium structure for health insurance plans. Non-life insurers use a risk-based pricing for health insurance, which makes coverage expensive as people age. However, there has been objections from policyholders who have been paying premium for years without a claim. ICICI Prudential is looking at introducing a policy where the premium will remain the same year after year as in life insurance. The company is also building up a suite of health products with the latest being Crisis Cover, which provides for payment on detection of any of the 35 diseases covered. For distribution of health insurance, the company is using its existing agency network. However, the servicing has been outsourced to TTK Healthcare, a third-party administrator. Last week, the company’s promoters have increased its capital base by Rs 300 crore to Rs 2,372 crore. The promoters, ICICI Bank and Prudential, contributed to the capital in the existing proportion of 74:26, respectively. The capital infusion is aimed at driving the company’s expansion over the next year, which includes opening new branches and offices across the country as well as scaling up operations. A couple of months ago ICICI Bank had said it would transfer shares in its insurance and asset management business to a holding company — ICICI Financial Services. All future funding requirements for its insurance business was to be raised by the holding company. ICICI Bank had received commitments from international investors to pick up 5% stake in ICICI Financial Services. The agreement with foreign investors valued the holding company at $10 billion. However, the proposal could not move forward as the Foreign Investment Promotion Board (FIPB) has not yet approved the proposal. There is a possibility that ICICI Bank may go ahead and unlock the value in insurance ventures by selling stake in the holding company to domestic investors. In the first quarter of the current financial year, ICICI Prudential notched up new business group premiums of Rs 987 crore, posting a quarter-on-quarter growth of 22%. Renewal premium showed a strong growth of 98%
Source:Economic Times
Source:Economic Times
ICICI Prudential hikes capital base
ICICI Prudential Life Insurance has increased its capital base by Rs 300 crore to Rs 2,372 crore. The capital has been infused by the promoters ICICI Bank and Prudential plc, in the existing proportions of 74:26 respectively. “The additional capital will be used to fund the high up-front expenses and meet the solvency norms. It will also enable ICICI Prudential to continue driving its expansion strategy over the next year, which includes opening new branches and offices across the country as well as scaling up operations,” said a press release. ICICI Prudential registered a growth of 22 per cent in new business weighted premium in the first quarter of 2006-07 at Rs 987 crore. The company wrote over 4,50,000 policies over the period and increased its assets held to over Rs 18,400 crore.
— Our BureauICICI Prudential Life Insurance has increased its capital base by Rs 300 crore to Rs 2,372 crore. The capital has been infused by the promoters ICICI Bank and Prudential plc, in the existing proportions of 74:26 respectively. “The additional capital will be used to fund the high up-front expenses and meet the solvency norms. It will also enable ICICI Prudential to continue driving its expansion strategy over the next year, which includes opening new branches and offices across the country as well as scaling up operations,” said a press release. ICICI Prudential registered a growth of 22 per cent in new business weighted premium in the first quarter of 2006-07 at Rs 987 crore. The company wrote over 4,50,000 policies over the period and increased its assets held to over Rs 18,400 crore.
Source:Business Line
— Our BureauICICI Prudential Life Insurance has increased its capital base by Rs 300 crore to Rs 2,372 crore. The capital has been infused by the promoters ICICI Bank and Prudential plc, in the existing proportions of 74:26 respectively. “The additional capital will be used to fund the high up-front expenses and meet the solvency norms. It will also enable ICICI Prudential to continue driving its expansion strategy over the next year, which includes opening new branches and offices across the country as well as scaling up operations,” said a press release. ICICI Prudential registered a growth of 22 per cent in new business weighted premium in the first quarter of 2006-07 at Rs 987 crore. The company wrote over 4,50,000 policies over the period and increased its assets held to over Rs 18,400 crore.
Source:Business Line
Vijaya Bank to exit life insurance venture
Bangalore/ New Delhi July 31 Public sector Vijaya Bank has decided to completely pull out of the life insurance joint venture with Punjab National Bank and the Principal Financial Group (PFG) of the US.
The move has jeopardised PFG’s proposal to enter the domestic life insurance market. This is because under the current Reserve Bank of India guidelines at least two banks are necessary in any joint venture.
The Vijaya Bank Chairman and Managing Director, Mr Prakash P. Mallya, told Business Line, “We are pulling out completely from the joint venture, since there is no financial benefit for Vijaya Bank in it.”
As per the shareholder agreement, the proposed capital for the life insurance venture was Rs 110 crore. Vijaya Bank was a minority stakeholder with a stake of just 12 per cent. PNB and PFG were expected to hold 30 and 26 per cent respectively. In fact, Vijaya Bank had sought a larger equity role in the venture. Vijaya Bank had proposed to buy out Berger Paints’ 32 per cent stake in the joint venture. But the proposal had become deadlocked, sources said. This was because PNB wanted to takeover the stake and retain majority control in the venture. In fact, PNB’s Chairman and Managing Director, Mr K.C. Chakraborty, had recently said, “The company has still not been formulated and there might be a rethink on all the issues. The shareholding pattern and the constitution of the company might change.”Passive investor
Vijaya Bank fears that it would become a passive financial investor. “Small stakes will not give us any big benefits,” Mr Mallya said. Asked whether the pullout included all the joint ventures with the partners, Mr Mallya said, “We are pulling out completely from all the joint ventures.” This implied that the operational companies in the three-way joint venture arrangement would also be impacted. The operational ventures include the Principal PNB Asset Management Company, where Vijaya Bank is a 5 per cent stakeholder and the PNB Principal Insurance Advisory Company where it is a 19 per cent stakeholder.
However, PFG was still attempting to salvage the joint venture. PFG’s country head, Mr Rajan Ghotgalkar, said, “Principal Financial is committed to expand its operations in India. At the moment we are reviewing the entire strategy and currently, negotiations are on with the other joint venture partners.”Other suitors
The pullout now leaves the floor open for other suitors to woo Vijaya Bank. Those in the race include private sector insurers that Mr Mallya declined to name. He said, “We will examine all the options before us. We also have other foreign companies before us.” But almost all the private sector insurers were on the lookout for the induction of third partners to increase the paid-up equity and accelerate their respective growth rates. This was because under the current guidelines foreign partner stakes in domestic insurance ventures is capped at 26 per cent.
Accelerated growth implied increase in liabilities and consequent solvency pressures that would have to be offset by periodic capital infusions. Bangalore/ New Delhi July 31 Public sector Vijaya Bank has decided to completely pull out of the life insurance joint venture with Punjab National Bank and the Principal Financial Group (PFG) of the US.
The move has jeopardised PFG’s proposal to enter the domestic life insurance market. This is because under the current Reserve Bank of India guidelines at least two banks are necessary in any joint venture.
The Vijaya Bank Chairman and Managing Director, Mr Prakash P. Mallya, told Business Line, “We are pulling out completely from the joint venture, since there is no financial benefit for Vijaya Bank in it.”
As per the shareholder agreement, the proposed capital for the life insurance venture was Rs 110 crore. Vijaya Bank was a minority stakeholder with a stake of just 12 per cent. PNB and PFG were expected to hold 30 and 26 per cent respectively. In fact, Vijaya Bank had sought a larger equity role in the venture. Vijaya Bank had proposed to buy out Berger Paints’ 32 per cent stake in the joint venture. But the proposal had become deadlocked, sources said. This was because PNB wanted to takeover the stake and retain majority control in the venture. In fact, PNB’s Chairman and Managing Director, Mr K.C. Chakraborty, had recently said, “The company has still not been formulated and there might be a rethink on all the issues. The shareholding pattern and the constitution of the company might change.”Passive investor
Vijaya Bank fears that it would become a passive financial investor. “Small stakes will not give us any big benefits,” Mr Mallya said. Asked whether the pullout included all the joint ventures with the partners, Mr Mallya said, “We are pulling out completely from all the joint ventures.” This implied that the operational companies in the three-way joint venture arrangement would also be impacted. The operational ventures include the Principal PNB Asset Management Company, where Vijaya Bank is a 5 per cent stakeholder and the PNB Principal Insurance Advisory Company where it is a 19 per cent stakeholder.
However, PFG was still attempting to salvage the joint venture. PFG’s country head, Mr Rajan Ghotgalkar, said, “Principal Financial is committed to expand its operations in India. At the moment we are reviewing the entire strategy and currently, negotiations are on with the other joint venture partners.”Other suitors
The pullout now leaves the floor open for other suitors to woo Vijaya Bank. Those in the race include private sector insurers that Mr Mallya declined to name. He said, “We will examine all the options before us. We also have other foreign companies before us.” But almost all the private sector insurers were on the lookout for the induction of third partners to increase the paid-up equity and accelerate their respective growth rates. This was because under the current guidelines foreign partner stakes in domestic insurance ventures is capped at 26 per cent.
Accelerated growth implied increase in liabilities and consequent solvency pressures that would have to be offset by periodic capital infusions.
source:Business Line
The move has jeopardised PFG’s proposal to enter the domestic life insurance market. This is because under the current Reserve Bank of India guidelines at least two banks are necessary in any joint venture.
The Vijaya Bank Chairman and Managing Director, Mr Prakash P. Mallya, told Business Line, “We are pulling out completely from the joint venture, since there is no financial benefit for Vijaya Bank in it.”
As per the shareholder agreement, the proposed capital for the life insurance venture was Rs 110 crore. Vijaya Bank was a minority stakeholder with a stake of just 12 per cent. PNB and PFG were expected to hold 30 and 26 per cent respectively. In fact, Vijaya Bank had sought a larger equity role in the venture. Vijaya Bank had proposed to buy out Berger Paints’ 32 per cent stake in the joint venture. But the proposal had become deadlocked, sources said. This was because PNB wanted to takeover the stake and retain majority control in the venture. In fact, PNB’s Chairman and Managing Director, Mr K.C. Chakraborty, had recently said, “The company has still not been formulated and there might be a rethink on all the issues. The shareholding pattern and the constitution of the company might change.”Passive investor
Vijaya Bank fears that it would become a passive financial investor. “Small stakes will not give us any big benefits,” Mr Mallya said. Asked whether the pullout included all the joint ventures with the partners, Mr Mallya said, “We are pulling out completely from all the joint ventures.” This implied that the operational companies in the three-way joint venture arrangement would also be impacted. The operational ventures include the Principal PNB Asset Management Company, where Vijaya Bank is a 5 per cent stakeholder and the PNB Principal Insurance Advisory Company where it is a 19 per cent stakeholder.
However, PFG was still attempting to salvage the joint venture. PFG’s country head, Mr Rajan Ghotgalkar, said, “Principal Financial is committed to expand its operations in India. At the moment we are reviewing the entire strategy and currently, negotiations are on with the other joint venture partners.”Other suitors
The pullout now leaves the floor open for other suitors to woo Vijaya Bank. Those in the race include private sector insurers that Mr Mallya declined to name. He said, “We will examine all the options before us. We also have other foreign companies before us.” But almost all the private sector insurers were on the lookout for the induction of third partners to increase the paid-up equity and accelerate their respective growth rates. This was because under the current guidelines foreign partner stakes in domestic insurance ventures is capped at 26 per cent.
Accelerated growth implied increase in liabilities and consequent solvency pressures that would have to be offset by periodic capital infusions. Bangalore/ New Delhi July 31 Public sector Vijaya Bank has decided to completely pull out of the life insurance joint venture with Punjab National Bank and the Principal Financial Group (PFG) of the US.
The move has jeopardised PFG’s proposal to enter the domestic life insurance market. This is because under the current Reserve Bank of India guidelines at least two banks are necessary in any joint venture.
The Vijaya Bank Chairman and Managing Director, Mr Prakash P. Mallya, told Business Line, “We are pulling out completely from the joint venture, since there is no financial benefit for Vijaya Bank in it.”
As per the shareholder agreement, the proposed capital for the life insurance venture was Rs 110 crore. Vijaya Bank was a minority stakeholder with a stake of just 12 per cent. PNB and PFG were expected to hold 30 and 26 per cent respectively. In fact, Vijaya Bank had sought a larger equity role in the venture. Vijaya Bank had proposed to buy out Berger Paints’ 32 per cent stake in the joint venture. But the proposal had become deadlocked, sources said. This was because PNB wanted to takeover the stake and retain majority control in the venture. In fact, PNB’s Chairman and Managing Director, Mr K.C. Chakraborty, had recently said, “The company has still not been formulated and there might be a rethink on all the issues. The shareholding pattern and the constitution of the company might change.”Passive investor
Vijaya Bank fears that it would become a passive financial investor. “Small stakes will not give us any big benefits,” Mr Mallya said. Asked whether the pullout included all the joint ventures with the partners, Mr Mallya said, “We are pulling out completely from all the joint ventures.” This implied that the operational companies in the three-way joint venture arrangement would also be impacted. The operational ventures include the Principal PNB Asset Management Company, where Vijaya Bank is a 5 per cent stakeholder and the PNB Principal Insurance Advisory Company where it is a 19 per cent stakeholder.
However, PFG was still attempting to salvage the joint venture. PFG’s country head, Mr Rajan Ghotgalkar, said, “Principal Financial is committed to expand its operations in India. At the moment we are reviewing the entire strategy and currently, negotiations are on with the other joint venture partners.”Other suitors
The pullout now leaves the floor open for other suitors to woo Vijaya Bank. Those in the race include private sector insurers that Mr Mallya declined to name. He said, “We will examine all the options before us. We also have other foreign companies before us.” But almost all the private sector insurers were on the lookout for the induction of third partners to increase the paid-up equity and accelerate their respective growth rates. This was because under the current guidelines foreign partner stakes in domestic insurance ventures is capped at 26 per cent.
Accelerated growth implied increase in liabilities and consequent solvency pressures that would have to be offset by periodic capital infusions.
source:Business Line
United India Insurance posts 24% growth in net
Chennai, July 30 United India Insurance Company, the Chennai-headquartered public sector insurance company, has reported a 24 per cent growth in net profit at Rs 529 crore for the year 2006-07.
The company has also announced a 70.5 per cent dividend of Rs 105.77 crore on the enhanced capital of Rs 150 crore.
Gross premium of the company climbed 11 per cent to Rs 3,499 crore. Of this, Rs 664 crore was contributed by fire segment, Rs 263 by marine insurance (both cargo and hull) and Rs 2,570 crore by miscellaneous items including engineering, motor, health and other insurance.
Announcing the results, Mr M.K. Garg, Chairman & Managing Director, said that prudent underwriting and improved claims management besides cutting down of expenses had helped post an improved performance. Additional provision
Mr Raju Sharan, Financial Advisor, said profits might have been higher but for an additional provision of Rs 163 crore on account of Accounting Standard – 15 (employee benefits).
He said the company had taken the decision to absorb the additional provision this year itself (instead of spreading it over the next few years).
Mr Garg said that there was not much of an impact on the results because of the detariffing that came into effect in the last quarter of the last fiscal. The company could maintain a growth rate of 11 per cent despite a 25 per cent decline in fire and engineering insurance rates.
Asked about the drop in investment income, Mr Garg said that this was due to markets being volatile last year and the company’s own cautious approach.
In 2005-06, there had been a higher target for sale of shares in view of the requirements to meet wage arrears. This year there was no compulsion and the management also felt that there would be a further rise in stock prices and hence did not liquidate its holdings significantly.
The company expects to achieve a premium income of Rs 4,000 crore in the current fiscal.
source:Business Line
The company has also announced a 70.5 per cent dividend of Rs 105.77 crore on the enhanced capital of Rs 150 crore.
Gross premium of the company climbed 11 per cent to Rs 3,499 crore. Of this, Rs 664 crore was contributed by fire segment, Rs 263 by marine insurance (both cargo and hull) and Rs 2,570 crore by miscellaneous items including engineering, motor, health and other insurance.
Announcing the results, Mr M.K. Garg, Chairman & Managing Director, said that prudent underwriting and improved claims management besides cutting down of expenses had helped post an improved performance. Additional provision
Mr Raju Sharan, Financial Advisor, said profits might have been higher but for an additional provision of Rs 163 crore on account of Accounting Standard – 15 (employee benefits).
He said the company had taken the decision to absorb the additional provision this year itself (instead of spreading it over the next few years).
Mr Garg said that there was not much of an impact on the results because of the detariffing that came into effect in the last quarter of the last fiscal. The company could maintain a growth rate of 11 per cent despite a 25 per cent decline in fire and engineering insurance rates.
Asked about the drop in investment income, Mr Garg said that this was due to markets being volatile last year and the company’s own cautious approach.
In 2005-06, there had been a higher target for sale of shares in view of the requirements to meet wage arrears. This year there was no compulsion and the management also felt that there would be a further rise in stock prices and hence did not liquidate its holdings significantly.
The company expects to achieve a premium income of Rs 4,000 crore in the current fiscal.
source:Business Line
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