Chennai: Two public sector banks, Canara Bank and Oriental Bank of Commerce, have joined hands with HSBC Insurance (Asia-Pacific) Holdings to float a life insurance venture in India.
The trio, which has announced plans to set up an insurance venture in March this year, also signed a formal agreement for setting up the JV.
Christened Canara HSBC Oriental Bank of Commerce Life Insurance Company Limited, the new life insurance company will have an equity base of Rs200 crore. Canara Bank will hold 51 per cent stake in the life insurance company while HSBC Insurance (Asia-Pacific) and Oriental Bank of Commerce will hold 26 per cent and 23 per cent respectively.
HSBC Insurance has contributed Rs125 crore as premium for its 26 per cent stake while Canara Bank and Oriental Bank are subscribing to the capital at par value.
Under the terms of the agreement, HSBC will provide a range of management services, which will include nominating executives for certain senior roles.
"The business model will be largely bancassurance driven. The life insurance company will leverage the extensive branch network of the three promoters and their large customer base," says Harpal S Karlcut, CEO designate of Canara HSBC Oriental Bank of Commerce Life Insurance.
Forty-two-year-old Karlcut is a hardcore insurance professional. He was earlier CEO of HSBC Life Insurance, UK and chairman, Marks & Spencer Life Insurance Company, UK.
He will be the first qualified actuary to head a private sector life insurance company in India. A mathematics graduate from Cambridge University, UK, Karlcut also has an MBA degree apart from the actuarial qualification from the Institute of Actuaries, UK. He is with the HSBC group for the past 15 years.
According to him, the proposed life insurance company will have access to over 40 million customers and a nationwide distribution network of 3,600 branches throughout India.
While both Canara Bank and Oriental Bank of Commerce offer an extensive client base, complementary distribution networks and broad local market knowledge, HSBC brings to this partnership its considerable insurance experience, product range and proven bancassurance capabilities.
Speaking about the product portfolio of the proposed life insurer, he said: "Each of our shareholders already sell life insurance products and they know the market well. We will have a good mix of traditional and unit linked products."
At a time when other domestic life insurers are known by the first two words in their name- ICICI Prudential, Bajaj Allianz, HDFC Standard and the like- it will be surely interesting how Canara HSBC Oriental Bank of Commerce Life Insurance would be know in short.
Tuesday, September 11, 2007
Sunday, August 19, 2007
Bajaj Allianz reshuffles top management
MUMBAI: There has been a churn at the top management of Bajaj Allianz. Allianz country manager and Bajaj Allianz Life Insurance CEO Sam Ghosh is moving to Allianz’s operations in the Middle East. Kamesh Goyal, who is currently the CEO of Bajaj Allianz General Insurance Company, is stepping into the shoes of Mr Ghosh. Mr Goyal’s post will be now filled by Sawraj Krishnan, who is currently the general manager in the company. Mr Ghosh’s move is the third in line in the insurance sector. Dalip Verma of Tata AIG moved to the Middle East. He was followed by Anthony Jacob, who is also moving to the region to take up regional operations at Royal SunAlliance. Mr Ghosh will take over regional responsibilities in the Middle East. Mr Ghosh was the third CEO of the life insurance company. He was earlier working for Australian insurance company MMI which was acquired by Allianz. He was the representative of Allianz in India and was earlier the head of non-life company before he was shifted to the life insurance company. When he took over the company, it was languishing at number seven in industry rankings. Within two years, it became number two among private companies. He has been very aggressive in scaling up the company and has been focusing on volumes- growing premium income and distribution network. Mr Goyal was earlier the head of insurance practice with KPMG, when the sector was opened up. The market share of the company has gone up from 2.8% to 7.2% ever since he took charge in January 2004. He will now be Allianz’s representative in India. The general insurance company has made a profit before taxes of Rs 117 crore and a profit after tax of Rs 75 crore. In the first quarter of the current financial year, it garnered a premium income of Rs 574 crore and net profit of Rs 21 crore. The move has to be cleared by the boards of both companies and the regulator. Both insurance companies together would have an employee strength of over 30,000 while total revenues would be above Rs 10,000 crore. The shuffle is coming at a time, when Bajaj Auto is set to demerge the financial services company and list it separately. The German major is also on an aggressive rollout mode in the country. It is in the process of kicking off its mutual fund activities. The mutual fund will also be the responsibility of Mr Goyal. It is also looking at kicking off banking operations in India through Dresdner. Allianz had taken over Dresdner, internationally. Desdner earlier had operations in the country which it had closed earlier in the decade. Allianz has now applied for a banking licence to RBI. However, the German major is planning to use the Allianz brand for the bank.
Source: www.economictimes.com 16 Aug, 2007, 0449 hrs IST, Times News Network
Bajaj Allianz is worst hit by IRDA ruling on Ulips
DNA Money
Bajaj Allianz is likely to be hit the most by the Insurance Regulatory and Development Authority (IRDA) ban on certain category of unit-linked insurance policies (Ulips).
The "capital unit-linked" products, which were banned by IRDA on Thursday, account for 40 per cent of the company's premium income.
Bajaj Allianz CEO Sam Ghosh confirmed this to DNA Money.
"True, a large amount of premium comes from this category, but not everyone is financially astute. We will devise new products. The same happened with our single premium plans, which once constituted about 45 per cent of our premium, but now they account for just 7-8 per cent," he said.
The banned products, which the IRDA terms "customer unfriendly", are hot- selling cakes for insurers.
Ulips constitute the bulk of premium for almost all private life insurance companies as well as the Life Insurance Corporation, which has seen a rise in its premium, largely on account of Ulips.
While asking companies to withdraw the products, the insurance regulator said that even though the policies may be technically sound, they're quite complicated for the insured.
Said Ghosh: "IRDA has indicated that this is a complex product and should be withdrawn from the market. It feels that the customer may not understand the product. Such capital unit-linked products are sold in other countries but perhaps it is a difficult product for the regular customer."
Aviva India is another company that's likely to be hit by the latest IRDA directive.
While mis-selling has been a serious issue in the market in recent times, the stern action by IRDA on specific categories of unit-linked plans comes as the second major step since last July, when all unit-linked plans had to be locked in for a three-year period.
These unit-linked products, unlike other Ulips, are structured in such a way that they have two types of allocations in capital and regular units.
Ghosh said that as his company prepares new products, it would target more pension and children's products, for which it has applied to the regulator.
Bajaj Allianz is one of the few private life companies that have already started making profits. According to Ghosh, the company has a "cost under-run" as most of the expenses are covered within the cost structure.
An Aviva spokesperson said, "We have no communication from the IRDA on any ban on actuarial-funded products. All our products, including the one where actuarial funding has been used, have been pre-approved by IRDA and are designed on sound actuarial principles."
"We have been selling these products for years in the country and these have been approved by the regulator as they follow all guidelines and regulations laid down by IRDA. None of our products are detrimental to the interest of any existing or prospective customers. In fact, one of our actuarial-funded products was approved as recently as May 2007," the spokesperson added.
Bajaj Allianz is likely to be hit the most by the Insurance Regulatory and Development Authority (IRDA) ban on certain category of unit-linked insurance policies (Ulips).
The "capital unit-linked" products, which were banned by IRDA on Thursday, account for 40 per cent of the company's premium income.
Bajaj Allianz CEO Sam Ghosh confirmed this to DNA Money.
"True, a large amount of premium comes from this category, but not everyone is financially astute. We will devise new products. The same happened with our single premium plans, which once constituted about 45 per cent of our premium, but now they account for just 7-8 per cent," he said.
The banned products, which the IRDA terms "customer unfriendly", are hot- selling cakes for insurers.
Ulips constitute the bulk of premium for almost all private life insurance companies as well as the Life Insurance Corporation, which has seen a rise in its premium, largely on account of Ulips.
While asking companies to withdraw the products, the insurance regulator said that even though the policies may be technically sound, they're quite complicated for the insured.
Said Ghosh: "IRDA has indicated that this is a complex product and should be withdrawn from the market. It feels that the customer may not understand the product. Such capital unit-linked products are sold in other countries but perhaps it is a difficult product for the regular customer."
Aviva India is another company that's likely to be hit by the latest IRDA directive.
While mis-selling has been a serious issue in the market in recent times, the stern action by IRDA on specific categories of unit-linked plans comes as the second major step since last July, when all unit-linked plans had to be locked in for a three-year period.
These unit-linked products, unlike other Ulips, are structured in such a way that they have two types of allocations in capital and regular units.
Ghosh said that as his company prepares new products, it would target more pension and children's products, for which it has applied to the regulator.
Bajaj Allianz is one of the few private life companies that have already started making profits. According to Ghosh, the company has a "cost under-run" as most of the expenses are covered within the cost structure.
An Aviva spokesperson said, "We have no communication from the IRDA on any ban on actuarial-funded products. All our products, including the one where actuarial funding has been used, have been pre-approved by IRDA and are designed on sound actuarial principles."
"We have been selling these products for years in the country and these have been approved by the regulator as they follow all guidelines and regulations laid down by IRDA. None of our products are detrimental to the interest of any existing or prospective customers. In fact, one of our actuarial-funded products was approved as recently as May 2007," the spokesperson added.
Ulip customers to sign certificate of approval
DNA Money
Customers will have to sign a "certificate" stating approval and satisfaction while buying a unit-linked insurance plan (Ulip) for the first time.
The Insurance Regulatory and Development Authority (IRDA), as part of its drive to prevent 'mis-selling', is in the process of asking companies to prepare a one-page document with each and every Ulip, which is being sold to the insured.
This comes as a major move by IRDA, after having clamped down on specific actuarially funded products of a couple of companies.
The insurance regulator plans to keep on "discovering" the various discrepancies which may arise and cause discomfort to customers.
"We want to facilitate some kind of understanding to customers and, hence, have thought of asking the customer to sign a certificate which should state that he or she is satisfied with what the agent has said and the buy has been an informed choice," C S Rao, chairman, IRDA, told DNA Money.
All insurance companies are likely to formulate questions on each product and submit them to the IRDA for approval.
This additional page, in the form of a certificate, will come with the policy document.
"Apart from some instances of mis-selling, we were concerned with a number of advertisements, which were not, however, technically advertisements, but kind of pamphlets with tall promises distributed with newspapers or communicated over telephone. These pamphlets, at times, carried just names of agents promising high returns," Rao explained.
The most rampant form of mis-selling is the financial advisor or agent misleading the customer to unrealistic promises of 40-50 per cent returns verbally, on the basis of the stock market boom last year, although, in reality, they cannot give indicative returns of more than 10 per cent a year.
Customers will have to sign a "certificate" stating approval and satisfaction while buying a unit-linked insurance plan (Ulip) for the first time.
The Insurance Regulatory and Development Authority (IRDA), as part of its drive to prevent 'mis-selling', is in the process of asking companies to prepare a one-page document with each and every Ulip, which is being sold to the insured.
This comes as a major move by IRDA, after having clamped down on specific actuarially funded products of a couple of companies.
The insurance regulator plans to keep on "discovering" the various discrepancies which may arise and cause discomfort to customers.
"We want to facilitate some kind of understanding to customers and, hence, have thought of asking the customer to sign a certificate which should state that he or she is satisfied with what the agent has said and the buy has been an informed choice," C S Rao, chairman, IRDA, told DNA Money.
All insurance companies are likely to formulate questions on each product and submit them to the IRDA for approval.
This additional page, in the form of a certificate, will come with the policy document.
"Apart from some instances of mis-selling, we were concerned with a number of advertisements, which were not, however, technically advertisements, but kind of pamphlets with tall promises distributed with newspapers or communicated over telephone. These pamphlets, at times, carried just names of agents promising high returns," Rao explained.
The most rampant form of mis-selling is the financial advisor or agent misleading the customer to unrealistic promises of 40-50 per cent returns verbally, on the basis of the stock market boom last year, although, in reality, they cannot give indicative returns of more than 10 per cent a year.
FIPB nod to ICICI's insurance holding co stake sale
Press Trust of India
New Delhi: The Foreign Investment Promotion Board (FIPB) has given its approval for ICICI Bank's proposal to divest 24% stake in its holding firm for the insurance business.
New Delhi: The Foreign Investment Promotion Board (FIPB) has given its approval for ICICI Bank's proposal to divest 24% stake in its holding firm for the insurance business.
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