Icici Pru Investment

INVESTMENT PHILOSOPHY
AT
ICICI PRUDENTIAL LIFE
Submitted for partial fulfillment of B.com 2nd(professional) degree in the
Deptt. Of Commerce
GURU NANAK DEV UNIVERSITY, AMRITSAR

SESSION (2008-2009)
Submitted To: Prepared By:
GEETA MONEY VISHVJEET SINGH

(Deptt. Of Commerce) B. Com(p) 2nd
College Roll No:-
Uni. Roll No:-
Submitted through the principal:
Saint Soldier College,Hadiabad

Phagwara.
CONTENTS
Acknowledgement
Preface
1. Introduction to the Company
2. Introduction to the Topic
3. Research Methodology
4. SWOT Analysis
5. Recommendations & Suggestions
6. Conclusion
Bibliography
INTRODUCTION
ICICI Prudential Life Insurance Company Limited has grown in leaps and
bounds in the past four years. They have consistently been the No. 1
‘Private Life Insurer’ in the country and have sold more than a million
policies till date. And this position has been ensured because of the trust
and faith people have put in them.
This trust and faith is based on solid foundation of providing customers
with a peace of mind and promise that their money is absolutely safe with
them. As a company, they ensure the safety of investor’s money by:
1. Adhering to IRDA regulations
2. Maintaining Reserves
3. Adhering to investment norms laid down by IRDA
4. Maintaining solvency margin
5. Infusing capital put by the shareholders
The Company
ICICI Prudent Life Insurance Company is
 A joint venture between one of India’s leading financial institutions
and one of world’s largest life insurance companies.
 Today they are the No.1 private life insurance company in India.
 Professional, highly trained and competent advisors.
 Need based solution.
 Excellent range of customized solutions to suit every need.
ICICI Bank
 One of the largest financial institutions in India.
 Broad spectrum of financial solutions for corporate and retail
customers.
 Assets in excess of Rs. 100000 crores.
 Better than sovereign rating (Moody’s)
 First Indian company to be listed on New York Stock exchange.
 Trusted by millions of Indians over the years.
Prudential
 Started operations in 1848 and is now over of the largest Life
Insurance Companies in the world.
 Presence in U.K, Europe, US & throughout Asia.
 Insurance & Investment funds under management exceeds Rs.
11,00,000 crores.
 Already established as one of the biggest mutual fund company in
India (Prudential, ICICI, AMC)
 A truly global brand.
ICICI Prudential was amongst the first private sector insurance companies
to begin operations in December 2000 after receiving approval from
Insurance Regulatory development authority (IRDA).
ICICI Prudential equity base stands at Rs.925 crore with ICICI Bank and
Prudential Plc holding 74% & 26% stake respectively. In the period April
December 2004, the company governed Rs. 860 crore of new business
premium for a total sum assured of over Rs. 7360 crore and wrote nearly
3,45,000 policies. Today the company is the No. I private Life Insurance in
the country.
FINANCIAL MARKETS
A market is a place where buyers and sellers come together to execute
trades and satisfy their needs. In simple terms “a financial market is a
market where financial instruments are bought and sold”
The financial instruments can be in the form of cash or other assets, that
represent a form of cash. For e.g. fixed deposits, shares, bonds, etc.
These markets are further categorized into
1. Primary Market
2. Secondary Market
Primary Market
In this the manufacturer or the person directly holding the asset, sells or
transacts with the end user.
Secondary Market
In this there are a number of transactions that take place before the end
user get the good that is required.
To get clarity of the above let is see the following example:
Now let us take the example of the vegetable market. Let us say that a
farmer who grows vegetable takes his produce early in the morning to the
wholesale market Vashi/Azadpur. Now when he goes there, there are few
buyers who buy his produce from him and stocks it with themselves.
The buyer might have bought it from him because he required it for his
own consumption or he intended to profit from reselling the vegetables at a
profit. However the farmer has sold his entire produce and has taken the
money for it and gone home. Now one of the buyers takes the produce and
goes and sells it in Chembur/Greater Kailash. While doing so the reseller
makes a profit. However, the original farmer knows nothing of this retail
transaction and is not concerned either. Now there is another buyer who
also takes the vegetables to be resold in Lajpat Nagar / Andheri. When he
does so, he finds himself unable to sell the entire produce and very soon
the vegetables start rotting. Not wanting to be stuck with rotten vegetables,
this person offloads his entire stock to the local customers. But in the
process, he actually makes a loss.
This same mechanism operates in the case of primary and secondary
markets. When the farmer when and sold his produce in the wholesale
market the wholesale market acted as the primary market. It was like an
IPO where the corporate itself come and collected money from people
directly. Once the stock is listed on the exchange (just as the produce
reaches Chembur or Andhari, the promoter is no longer involved in trades.
The trades generally happen without his knowledge/consent and generally
he does not get any additional inflow from these trades. At the same time
the retail market allows the buyers of the initial stock to have continued
liquidity. Otherwise since equity is an investment having perennial term, a
person who bought in the primary market will be stuck with his investment
forever.
The above is one way to classify but the more often the financial markets
are classified on the basis of
 Money Market
 Capital Market
The basic distinction between the two is based on the difference in the
period of maturity of the financial assets (instrument) that is issued in these
markets.
Money markets deals with all transactions in short term instruments which
have a maturity period of one year or less. E.g. treasury bills, bills of
exchange, commercial papers etc.
Capital market deals with transaction related to long term instruments,
which have a period of maturity above one year. E.g. Government
securities, Shares, debentures etc.
Instruments covered in these markets
MONEY MARKETS
Call money
The call money market forms a part of the national money market, where
day-to-day surplus funds, mostly of banks is traded. The call money loans
are of very short terms in nature and the maturity periods of these loans
vary from 1 to 15 days. The money that is lent for one day is called as call
money and the money which is lent for more than one day but less than 15
days is called as notice money.
These markets are based mainly in Mumbai, Kolkata, Chennai, Delhi and
Ahemdabad, but Mumbai plays a dominant role in determining the call
money market and their movements.
Participants in this market are traditionally scheduled banks, but since
1997, RBI has broad-based the market. The other players now are the
primary dealers (16 in all – ICICI securities known as I-sec is one of the
primary dealer), mutual funds approved by SEBI (as lenders), GIC, IDBI,
NABARD & DFHI. Currently the average daily turnover in the call/notice
money market is around Rs.50000 crores Call money rates are currently
range bound at 4-5%.
But the highest ever was on 16th January 1998; when call money rates
shot-up to 140% because of the currency crisis in South East Asia.
Term money
Money borrowed or lent for more than 14 days. Current average daily
trading is around 150 crores. Term money market is range bound at 5-6%.
Treasury bills
These are short term borrowing instruments issued by the Govt. of India.
91-day
364-day
Treasury bills have been issued ever since the inception of Reserve Bank
of India in the year 1935. Treasury bills, also called T-bills, are negotiable
securities and since they can be rediscounted with RBI, they are highly
liquid. The other features are zero default risk, easy availability, assured
yield, low transaction cost and negligible capital depreciation.
T-bill are not issued in physical form. The purchases and sales are
effected through the SGL or Subsidiary General Ledger Account of the
participant. SGL is conceptually similar to a demat account. Current yield
for a 91 day T-bill is 7.2%.
Dated government securities
These are long term debt instruments issued by the government with fixed
coupon rates (rate of interest at the time the security was issued). These
are absolutely risk free since the sovereign guarantees them.
Certificates of Deposits (CD’s)
These are negotiable short-term deposit certificates issued by a
bank/financial institution with maturity ranging from three months to one
year. They are bank deposits, which are transferable from one party to
another.
Banks are issuing CDs in India since 1989, either directly to the investors
or through the dealers.
CDs are marketable or negotiable short-term instruments in bearer form
and are also known as Negotiable certificates of Deposit (NCD). The
minimum issue of CDs to a single investor is Rs. 10 lacs and additional
amount in multiples of Rs. 5 lacs each. CDs are technically a part of bank
deposits. But because they are in bearer form, they can be traded in the
secondary market. But the secondary market for CDs is not developed
because of lack homogeneity in the market. Mostly the financial bodies
keep the CD till full maturity.
Commercial Paper (CP)
These were introduced in January 1990, to enable highly rated corporate
borrowers to diversify their sources of short-term, unsecured borrowings
and to provide an additional instrument to the investor.
CP’s are issued in the form of promissory notes, redeemable at par by the
holder on maturity. CP’s can be issued only by corporates who have a
minimum net worth of 5 crores and an investment grade rating from credit
rating agencies. This translates into P2 from CRISIL or A2 from ICRA.
CP’s can be issued for tenors ranging from 15 days to 364 days. The
general tenor is 9 days. Minimum issues size of CP’s is 25 lacs and further
amounts in multiples of 5 lacs.
A CP allows a highly rated corporate to get money at a cheaper rate than
what the bank otherwise would have given it.
Corporate Bonds
Bonds issued by corporates which are generally unsecured and are
evidenced by a certificate issued by the company acknowledging the debt.
Generally has a fixed coupon rate. The bases for investment generally is
the track record of the issuer coupled with the credit rating it has.
Repo
Repurchase agreement or repo’s or buyback deals are transactions in
which two parties agree to sell and repurchase the same security.
Repo auctions are conducted for absorption of excess liquidity from the
money markets. It is conducted on a daily bases (except on Saturdays).
The tenor of repos is one day except for repos done on Fridays where the
tenor is stretched to three days by default. The funds from this instrument
are expected to be used by banks for their day to day mismatches in
liquidity. The participants of this market are scheduled commercial banks
and Primary Dealers. The minimum amount is Rs. 10 crores and further
amounts will be tendered in multiples of Rs. 5 crores. The securities
eligible for repos are transferable dated govt. securities and treasury bills.
Commercial bills
Bills of exchange are negotiable instruments drawn by the seller on the
buyer for the value of goods delivered to him. When such type of bills are
accepted by commercial bank, they can called CB’s.
CAPITAL MARKETS
This market has a tenor of more than 1 year. This is the place where
corporates (which have credibility in the market) can raise money to fund
new/existing businesses. The capital markets can be distinctively classified
into primary and secondary markets.
The primary market creates long term instruments through which
corporates entities borrow. It also has two components that we must
understand before proceeding further:
Debt
Equity
To study this we will take the help of the following illustration:
Let us say you wish to start a new business (say for setting up shop as a
service center) for which Rs. 1 lakh is required. You go to your bank that
decided to lend you Rs. 50000 @ 12% p.a. However, it requires some sort
of security for lending this money and so it gets you car hypothecated onto
its name. Now you still require another 50,000/- for which you go to your
father. Your father gives you the remaining 50,000 and you make him a
partner in your company to that extent.
The money that you got from the bank is what we call DEBT. The money
that your father gave to you is what we could called EQUITY. Now based
on this let us look the critical features of debt an equity.
Debt essentially means
A loan given to the company for which it will have to pay a fixed rate of
interest. There will be fixed term say 8 years or 10 years after which the
company has to repay the debt.
The obligation to repay debt, interest and then principal, is there
irrespective of profitability.
Equity essentially means
Ownership of the company to the extent of your investments. So if a
company has a share capital of 1 lac rupees and you own 50000 worth of
equity, you are the half owner of the company. But if the share capital was
Rs. 1 crore rupees and you own 50000 worth of equity, you are 1/200th
owner of the company. If you want to be half owner in the second case,
you need to buy shares worth 50 lacs.
There is no fixed term for equities (preference shares might be redeemable
after a term, but a preference share is not pure equity instrument).
The obligation and extent of repayment is directly related to profitability.
Instruments of debt market:
Fixed deposits
Debentures/bonds
Dated Govt. securities-issued at Face value.
Zero coupon bonds-issued at discount and no coupon charges.
Floating rate bonds-is an instrument whose periodic interest or dividend
are indexed to some reference index such as treasury bill.
Capital indexed bonds: Issued at face value, and is indexed with WPI
(wholesale Prince Index)
In the Indian Debt Market the share of Govt. security is 70%. The
percentage of debt as a percentage of the total market is low because the
secondary market of debt trading is not as robust as compared to equity.
INVESTMENT PHILOSOPHY
One of the key drivers of profitability for a life insurer is its investment
expertise. To understand more about the investment function let us start by
establishing the objectives the investment management function fulfills for
the company.
Funds under management
The status of funds under management at ICICI Prudential as of 20th
October 2004 stands at
Life Funds : Rs. 7545 Million ($168 Million)
Pension Funds : Rs. 1373 Million ($31 Million)
Linked Funds : Rs. 12762 Million ($ 284 Million)
Management Structure
Boards of Directors
Risk Management & Audit Board Investment Governance
Committee Committee Committee
Executive Investmetn
Committee
The first level (The Board Investment Committee’)
 Approve investment strategy
 Decide guidelines
 Comprises of Broad Members, ECO, CFO, Chief Actuary, Head-
Investments.
At the most macro level is the Board investment Committee which
sets the broad policy framework for the company’s investments. It meets
quarterly to discuss any performance or policy issues. This is a mandatory
requirement for IRDA.
The second level (The ‘Executive Investment Committee’)
 Set Performance benchmarks & limits
 Monitors investment performance
 Provides support on regulatory and tax issues
 Comprises CEO, CFO, Chief Actuary, Investments team, Investment
Ops.
The second tier is the Executive Investment Committee. This body
meets monthly to monitor investment performance vis a vis performance
benchmarks. They also assess the portfolio risk and based on the
recommendations of the financial risk management group (FRMG), agree
on the strategic asset allocation. Finally they also discuss any regulatory
issues.
The Third Level (The ‘Investments Team’)
 Tactical Portfolio Allocation
 Research & Portfolio Selection
 Market Timing & Deal execution
The third tier or the operational tier is the investments team.
We have an in-house 2 member team that manages all our funds. This is
the team which takes the actual investment “buy and sell” decision and
executes them. This is unlike some other companies who are using their
mutual fund to help them in them investment.
INVESTMENT PROCESS
The investment philosophy flows from the objectives we have set. This is
followed by investment management which takes care of the asset
allocation and security selection, while adhering to our risk and
performance management parameters. This is obviously subject to the
market and regulatory constraints we work under.
The investment process is as depicted in the chart.
Investment Objective
Investment Philosophy
Investment Management
Asset Allocation Risk management

Performance management Security selection
(Market Constraints) (Regulatory constraints)
INVESTMENT OBJECTIVES
Fund Benefit Support desired
Obligations to risk – return profile
Policy holders of the company
Investment Philosophy
Maximize Target superior

Discretionary Risk-adjusted
Benefits to returns in the long
Policy holders term
The investment function operates with multiple objectives. All of these
objectives need to be reflected in the investment philosophy of the
company.
 In non-par products it is the net spread between investment
income and return guaranteed to policyholder and accrues to
shareholders. It is vital that you earn enough investment income to
meet all these payouts as otherwise the shareholders will have to bring
in more capital.
 In par products 10% of profit and 100% of loses belongs to
shareholders, hence you should try and maximize the return earned to
get more profit for the shareholders. However you should also ensure
that you meet any base guarantees given.
 Finally in case of linked products the investment returns and risk is
with the policy holder and the company earns a fee on the total fund
size or assets under management (AUM). However as more often that
not the AUM will be a function of how well the fund performs and
maximizing returns should be the objective.
However trying to maximize returns has associated risks and if one takes
disproportionate risk one may do well for some time but the performance
won’t be sustainable or replicable. Hence the idea is to ensure adequate
risk-adjusted returns that are sustainable.
Finally and perhaps the most important objective of the function is to
support the risk-return appetite of the company. Every company needs
to decide what kind of risk it want on its balance sheet. This would be a
function of the industry in which the company operates, the stage of
lifecycle of the company and how stable/volatile it wants its performance to
be. The investment team helps in ensuring that the balance sheet risks are
within the parameters desired by the management and as articulated in
asset liability management (ALM) framework of the company.
PORTFOLIO CONSTRUCTION
Global
Trends
Macro
Economic
Observe & Analyse
Sector
/ Industry
……. The core of this strategy is to follow
both top-down and bottom up approach Company
We do not have any dedicated in house research. This is not warranted

given our size and the number of options available in the market. In
research one would have all the inputs, one would get information from a
number of sources but the final view is still ours.
Investment Deal Flow

 Investments Team Deal Execution
 Investment Operations  Segregates control and Execution
 Custodian  Deal settlement Fund Accounting / NAV Calculation

Investments are very critical part of the company’s operations and as has
been seen internationally, it is fraught with various operational risks to
moral hazard issues. Hence it is very important to segregate the control
and execution mechanisms of the investment process. We have
segregated the investment deal flow between three different independent
teams with clearly defined responsibilities. Infact we adopt best practices
for investment related activities.
Prudent Investment Norms
 Life fund
 Minimum 50% Government securities
 Minimum 15% infrastructure
 Pension Fund
 Minimum 40% Government securities
 Exposure limits for Sector, Group &
Industry
The exposure limit is based on Sector, Group & Industry so that the
investments have sufficient diversification to minimize risk factors. It gives
enough flexibility to mange investments based on company philosophy.
RISK MANAGEMENT FRAMEWORK
We group the products into certain categories based on associated risk
and the tools available to manage the risks. For e.g. Cashbak & Smart kid
have similar risks and so are clubbed while Reassure and Assure Invest
differ and so are kept separate for deciding the portfolio.
We create a separate portfolio for each category. This is very important to
ensure fair treatment to all policy holders. This also allows us to actually
monitor the efficacy of the investment and risk strategy.
What are basic kinds of Risk?
 Actuarial Risk It arises because of pricing assumption and models.
As discussed, in the financial services industry and specially the
insurance industry, profit is realized only over the life of the contract.
Hence if the assumptions made are not in sync with reality, the
company’s financial risk might arise. So we should have a Competent
Actuarial Team, working in close coordination with the investment
Team.
 Forex Risk:This is not applicable to us, as IRDA doesn’t allow us to
invest abroad.
 Liquidity Risk : This is not a very significant for us. This is because
most of our liabilities are not payable on demand unlike bank liabilities.
Even if a policy is surrendered the surrender penalty would compensate
for loss if any in liquidating investments for payout.
 Credit Risk : This is managed by ensuring two things:
• We take only a reasonable amount of risk.
• We get sufficient return to compensate for the risk.
We have restricted our credit portfolio to AA and above ratings. We have
taken data available with ICICI and CRISIL, which gives the probability that
if a company has certain credit rating, what is the probability that it will
default. Based on this probability we can decide what kind of minimum
return we should get to compensate us for the risk taken.
 Interest Rate Risk: It is the risk of changing interest
rates and the
impact that it has on the value of our assets and liabilities. This is one of
the most critical risks to manage for insurance companies. Numerous
insurance companies worldwide have collapsed due to mismanagement of
interest rate risk. Equitable life is a prominent example. It guaranteed 6%
to its customers when interest rates in UK were in the range of 10-12%.
They are today not in a position to meet the guarantees and are in state of
limbo closed for new business.
Why does Interest Rate Risk arise?
• The basic reason for interest rate risk on the balance
sheet of any company is the mismatch between their assets and
liabilities. For an insurance company it is even higher, as most of its
liabilities payable along with all accumulated benefits at the end of the
term, is usually more than 20 years. In India there are very few assets
with that maturity, and even if they are available they all pay periodical
interest, which means that all those interest inflow needs to be
reinvested and the rate would depend on market at that point. Hence at
best they can minimize the mismatch between asset and liability
maturity profile.
• One of the most unique features about managing
interest rate risk of a life insurer is the uncertainty of cash flow. The
manager has to deal with probabilities regarding timing and quantum of
lapsation and claims.
• Frequency of Repricing – There is always a time gap
between pricing of the product and actual selling of the product. Given
the market volatility, the assumptions used to price the product may not
hold at the time of actual sales, especially in case of guaranteed
products. The difference would have to be borne by shareholders. Even
in case of endowment plans that have a bonus element or for non
investment products like term the pricing rate needs to be revised if
there is a significant shift in long term view. Hence to minimize the risk
you need to reprise your products frequently.
• Premium available Upfront is the amount you can invest
but your guarantee is usually on the sum assured. Hence this crease a
mismatch as even on the future premiums the guarantee is valid
though the market conditions when you receive the premium may
be significantly different. Hence we minimize the guarantees paid on
regular premium products.
• Insurance products traditionally have several options
embedded in the products that allow a policy holder to choose against
the company. We have dealt with the various options in the following
manner.
• Settlement option
• Policy loan given at fixed rates
• Surrender options exercised
Investment based on product groups
The strategic allocation has two broad approaches. One that we use for
single premium guaranteed products and the other that we use for regular
premium with bonus plans. These generic approaches are divided for
various product categories.
Safety, Stability & Returns
Investment Strategy Target superior risk adjusted returns
Long term focus
Proactive fund management
Disciplined process based on research
For ULIP plans the objectives remain similar. The idea is to target returns
in the long run and objectives of SAFETY, STABILITY & RETURNS
remain the same. The key differences between managing funds for
traditional and linked plans are :
 The investment pattern depends on the objectives of the schemes
 The fund performance and investment pattern is transparent
 The investment risk is borne by the policy holder
This necessitates having a different investment strategy for linked plans. In
these plans the investment team has lot more freedom and they strive to
achieve superior risk adjusted returns.
Fixed income strategy
In case of linked plans there are no minimum investment norms by IRDA
or any ALM strategy to match liability duration. Hence most of the
investment decisions is based on market views.
 One major decision is the mix of government securities and
corporate securities.
 The second major decision is to decided the average matuity of
the bond portfolio.
 Cash is used pro-actively as an asset class.
Equity strategy
 The equity strategy is based on the following points
 To create a portfolio of stocks, which will outperform the
benchmark over the medium to long term.
 Minimize volatility with an aim to maximize risk adjusted
returns
 Investment style: Value oriented
Portfolio of blue-chip stocks
 Diversification across companies and sectors
 Liquidity consideration
 Quantifiable valuation parameters like P/E (Price / Earning Multiple),
PEG (Price Earning Growth), P/B (Price / Book value), DCF
(Discount Cash Flow) amongst others.
 Ownership pattern
Invest in medium to large size companies
 Superior management quality
 Financial strength & key earning divers
 Distinct and sustainable competitive advantage
 Leadership position in the category
 Internal risk control
Ensure diversification by being invested in 15-25 stock at all times
Universe primarily limited to blue chip stock no undue concentration
to any single stock/sector
 Weight of any individual stock to be within +/- 5% of benchmark
 Weight of any sector to be within +/- 10% of Benchmark
Sector/Stock deviation based on market outlook.
The idea is to concentrate on the large cap stock and blue chip companies.
The benchmark is the BSE 100 with allowable deviation of 5% for
company and 10% for sector. The implies that any stock not in the index
can be at max be 5% of the portfolio. This stock / sector bets allows the
team enough leeway to outperform the index while retaining a high degree
of control over performance so that the performance volatility vis a vis the
index is not very high. Similar structures are used by most professional
fund managers abroad.
FUNDS PHILOSOPHY
The team ‘funds’ has been defined in a number of ways.
a) In a narrow sense, it means cash only.
b) In a broader sense, the term ‘funds’ refers to money values in
whatever form it may exist. Here ‘funds’ means all financial
resources used in business whether in the form of men, material,
money, machinery and others.
c) In a popular sense, the term ‘funds’ means working capital i.e. the
excess of current assets over current liabilities.
MUTUAL FUNDS
Introduction
Not all people understand the dynamic and the complexities of the financial
markets – whether it is the share market or any other financial market. The
retail investor goes on the sentiments of the market without actually
studying the fundamental of the security in which investment is being
made. Moreover the retail investor usually does not have large sums of
money at disposal – and mutual funds is an instrument in which the retail
investor is able to put in small amounts of money and this can be done on
a regular basis.
A Mutual fund is a trust that pools the savings of a number of investors
who share a common financial goal. The money thus collected is invested
by a fund manager in different type of securities / financial instruments
depending upon the objectives of the scheme.
These investments could range from shares to debentures to money
market instruments. The income earned through these investments and
the capital appreciation (increase in capital) realized by the scheme are
shared by its unit holders in proportion to the number of units owned by
them.
Thus a Mutual Fund is the most suitable investment for the common man
as it offers an opportunity to invest in a diversified professionally managed
portfolio at a relatively low cost. The small savings of all the investors are
put together to increase the buying power and hire a professional manager
to invest and monitor the money.
Anybody with an investible surplus of as little as a few thousand rupees
can invest in Mutual Funds.
Concept of Mutual Funds
In order to get a clear understanding as to what is the underlying concept
of the mutual fund let us see the following example.
In a cooperative housing society that has 100 apartments, a security guard
is to be appointed. You find out that a good security guard cost Rs. 2000
per month. Now for a single household to pay Rs. 2000/- every month, it
would be a heavy burden.
Now if all the household got together and shared the costs then it would
make a better economic decision. Because all the residents of the housing
society have the same need and therefore it makes sense to pool together.
For this act of pooling together you approach the residents’ welfare
association (RWA). All the 100 flat owners contribute Rs. 20 per month
and ask (RWA) to appoint a security guard. Now it is the RWA’s
responsibility to ensure that the security guard is doing his job effectively.
They also monitor his performance. If the RWA is unhappy with the
security guard they can change the guard. The members keep
contributing. If one flat owner sells has flat and moves out of the society,
another flat owner takes his place and starts contributing.
Now in a Mutual fund structure there is a trust, which is like the members
of the co-operative society. The Asset management company is something
like the RWA, who is responsible for getting the right kind of security guard
and monitoring whether he is doing the right kind of job or not. Any lastly
the security guard is the investment.
Review of the Mutual Fund Industry
A lone UTI with just one scheme in 1964 now competes with as many as
400 odd products and 34 players in the market. In spite of the stiff
competition and losing market share, UTI still remains a formidable force to
reckon with.
Last six years have been the most turbulent as well as existing ones for
the industry. New players have come in, while others have decided to
close shop by either selling off on merging with others. The industry is also
having a profound impact on financial markets. While UTI has always been
a dominant player on the bourses as well as the debt markets, the new
generation of private funds which have gained substantial mass are now
seen flexing their muscles.
Funds have shifted their focus to the recession free sectors like
pharmaceuticals, FMCG and technology sector. Funds performances are
improving. Funds collection, which averaged at less than Rs. 100bn per
annum over five-year period spanning 1993-98 doubled to Rs 210bn in
1998-99.
In the current year mobilization till now have exceeded Rs300bn. Total
collection for the current financial year ending March 2000 is expected to
reach Rs450bn.
What is particularly noteworthy is that bulk of the mobilization has been by
the private sector mutual funds rather than public sector mutual funds.
Indeed private MFs saw a net inflow of Rs. 7819.34 crore during the first
nine months of the year as against a net inflow of Rs. 604.40 crore in the
case of public sector funds.
Mutual funds are now also competing with commercial banks in the race
for retail investor’s savings and corporate float money. The power shift
towards mutual funds has become obvious. The coming few years will
show that the traditional saving avenues are losing out in the current
scenario. Many investors are realizing that investments is saving avenues
are losing out in the current scenario. Many investors are realizing that
investments in savings accounts are as good as locking up their deposits
in a closet. The fund mobilization trend by mutual funds in the current year
indicates that money is going to mutual funds in a big way.
International scenario
Mutual funds gained popularity only after the 2nd world war and are also
known as the 21st century phenomenon.
U.S., FRANCE and Luxembourg dominate the global mutual fund industry.
India is at the first stage of a revolution that has already peaked in the U.S.
the U.S. the boasts of an Asset base that is much higher than its bank
deposits, but this trend is beginning to change. Recent figures indicate that
the mutual fund assets went up by 115% whereas bank deposits rose by
only 17%. (Source: Thinktank, The Financial Express September, 99) This
is forcing a large number of banks to adopt the concept of narrow banking
wherein the deposits are kept in Gilts and some other assets which
improves liquidity and reduces risk. The basic fact lies that banks cannot
be ignored and they will not close down completely. Their role as
intermediaries cannot be ignored. It is just that Mutual Funds are going to
change the way banks do business in the future. Some basic facts of
mutual Funds iNdustry worldwide:
• The money market mutual funds segment has a total corpus of $
1.48 trillion in the U.S. against a corpus of $ 100 million in India.
• Out of the top 10 mutual funds worldwide, eight are bank –
sponsored. Only Fidelity and Capital are non-bank mutual funds in
this group.
• In the U.S. the total number of schemes is higher than that of the
listed companies while in India.
• In the U.S. about 9.7 million household will manage their assets on-
line by the year 2005, such a facility is still at its nascent stage in
India.
Indian Mutual Fund Industry
A Mutual Fund scheme itself is a trust registered under the Indian Trust
Act.
1986-1993 is termed as the period of public sector mutual funds. From one
player it become 8 in 1993. It was in 1993 that international players such
as Morgan Stanley, Jardine Fleming entered.
Total
No. of Schemes Amount
Income 126 10347
Growth 132 1804
Balanced 36 255
Liquid / Money Market 37 56379
Gilt 32 880
ELSS 39 -
Total 402 69665
Total of all schemes (Rs. In crores)
There are today 28 Asset Management Companies in India holding Total

Assets under Management worth Rs. 157747 crore. Out of this 78% of all
the AUM come from the Private Sector.
**This data is collated from AMFI website as on 1 Sept 2004
Structure of Mutual Funds
There are a number of bodies that are a part of the mutual fund – let us
see what they are.
Sponsor
A mutual fund is initiated by a sponsor, which organizes and markets the
fund. It specifies the investment objectives of the fund, the risk associated,
the cost involved in the process and the broad rules for entry into and exit
from the fund and the other areas of operation. In India the sponsor
requires an approval from the Securities Exchange Board of India – SEBI.
A sponsor then hires an asset management company to invest the funds
according to the investment objective. It also hires another entity to be the
custodian of assets of the fund and perhaps a third one to handle registry
work for the unit holders of the fund.
Asset Management Company
The asset Management Company is formally appointed by the trustees of
the trust to mange money on their behalf.
Based on the rules of the land a sponsor can also hold 100% stake in the
A.M.C for e.g. DSP Merrill Lynch Equity funds is a mutual benefit trust
registered under the Indian Trust Act. The trustees have appointed DSP
Merill Lynch Asset Management Company Pvt. Ltd. to manage the funds in
the trust.
The AMC receives a fee for its services. Currently SEBI permits a fee of
1.2% p.a. of the asset value of the fund for a fund less than 10 crores. This
AMC reports to the trustees who have to safeguard the interests of the
investors in the mutual funds.
Trustee company
The sponsor promoters the Trustee Company or the trust. The trustees
include experienced and eminent people representing a cross section of
the industry and the society. They not only monitor performance of the
AMC but also oversee operations of the custodian and transfer agent.
Custodian
The A.M.C has to hire an outside custodian, which is responsible for the
custody of the assets of the fund. The custodian is also responsible for
receipt of all kinds of cash and non-cash benefits such as bonus, dividends
and rights. It is usually a bank or any other financially sound institution.
Registrar and transfer agents
The AMC hires this agency for taking care of purchase and sale of the
units of the funds, issue certificates / account statements to investors,
make dividend payments etc. E.g. Karvy Consultants.
MUTUAL FUND’S RISK – RETURN MATRIX
Equity Fund
Balanced Fund
Risk
Debt Fund
Liquid Fund
Returns
Shareholders
Board of Trustees
Oversees the Fund’s Activities, including approval of the contract with the
AMC and the other services providers
Mutual Fund
Investment Advisor/ Distributor

AMC Sells Fund shares either
Manages the Fund’s directly or through other
portfolio according to firms.
the objectives and the
policies described in
Custodian Independent Transfer agents

Holds the fund public Processes
assets, maintaining accountants orders to buy
them separately to Certify the and redeem
protect shareholder fund’s financial Fund shares.
interest statements.
Classification of Mutual Funds by investment objective
Mutual funds in the retail market are known by the fund into which they are
invested. We have some idea about the financial markets by now, and the
learning’s gained from there will be helpful in understanding the following
Growth / Equity Funds
These funds are invested only in equity shares of companies. Investors
buy these funds with the hope of earning high returns. It has been proved
that over the long term, return from stock outperform most other kind of
investment.
Industry specific funds
The investment decisions are taken only in the industries specified in the
offer document. Eg. Fast moving Consumer Goods, I.T. or
Pharmaceuticals etc. The performance is linked with the fortunes of the
sector.
Index Funds
These invest in stocks that comprise market indices such as BSE or the
NSE 50 (NIFTY) and rise or fall with these indices.
Sectoral Funds
Investments are exclusively in a specified sector. This could be an industry
or a group of industries or various segments such as ‘A’ group shares on
Initial Public Offering.
Target Markets of the equity / share market related funds can be
segmented as under:
Growth schemes are ideal for investor having a long term perspective
speculative outlook – The equity cult, who would like to make gains in the
shortest period of time and investors in their prime earning years –
specifically the young who have a decent earning and can take some kind
of risk.
Top Schemes in this category are
1. HSBC Equity Fund
2. UTI Dynamic Fund
3. Frankline India Prime Fund
For the quarter ended Aug 30, 2004. Rankings based on one year %
return
Excerpts of an investment strategy from an AMC in equity funds as
mentioned in the offer.
Type Approx. Allocation
Equity & Equity Related securities 95%
Debt, Money Market Securities & Cash 5%
(including money at call)
“The AMC selects scripts which focus on the fundamentals of the
business, the industry structure, the quality of management, sensitivity to
economic factors, the financial strength of the company and the key
earning drivers.”
For e.g. a corpus of size of Rs. 100 crores the AMC tends to invest in
about 20-30 scripts. Diversification will also be achieved by spreading the
investments over a diverse range of industries / sectors. The scheme may
however invest in unlisted and / or privately placed and / or unrated debt
securities subjects to the limits indicated. If investment is made in unrated
securities, the approval of the Board of the AMC shall be obtained as per
the regulations.
Investment in the Debt Markets
Debt / Income Funds
These are related to steady income bearing instruments like bonds,
corporate debentures with high and consistent dividend payout. These
funds give decent returns but the capital does not appreciate much.
1. HDFC Child Gilt Fund
2. UTI Mahila Unit Scheme
3. Pru ICICI Child Care Plan
For the quarter ended Aug 30, 2004. Rankings based on one year %
return
Target Market for Debt market funds are:
Retired people and others with a need for capital stability and regular
income. Investors who need some income to supplement their earnings.
Excerpts of an investment strategy from an AMC in income fund as
mentioned in the offer.
Type Approx. Allocation
Debt Securities 75%
Money Market Securities & Cash 25%
Balanced Funds
It’s a mix of equity and debt market instruments. Such schemes invest in
both equities and fixed income securities. In a rising stock market, the NAV
of these schemes may not normally keep pace with the Sensex or fall
when the market falls.
Target market
These are ideal for investors looking for a combination of income and
moderate growth.
E.g. Alliance 95, J.M. Balance fund GIC Balanced funds
1. Magnum Balanced Fund
2. HDFC Prudence Fund
3. Escorts Balanced Fund
For the quarter ended Aug 30, 2004. Ranking based on one year % return
Excerpts of an investment strategy from in balanced funds as mentioned in
the offer…..
Stock Picking: In a balance fund and approach to taking stocks is
different. A example of the objective that can be there for an AMC that has
a balanced fund to manage will be as”
Type Risk Profile Approx.
Allocation
Equity and Equity Related securities Medium to High 80%
Debt Securities & Money Market Low to Medium 20%
instruments & Cash (including –
money at call)
Money Market / Liquid Funds

The aim of the money market funds is to provide easy liquidity,
preservation of capital and moderate income. These schemes generally
invest in safer short-term instruments such as Government securities,
certificates of deposit, commercial paper and inter bank call money.
Returns on these schemes depend on the interest rates prevailing in the
market.
Target market
They provide a good place to park surplus funds for a short period. Meant
for people who look for completely secured investments. Ideal for both the
corporate and the small investor.
1. LIC MF Liquid Fund
2. Birla Sweep Plan
3. Tata Liquid Super High Investment Plan
For the quarter ended Aug 30, 2004. Ranking based on one year % return
Type Appox. Allocation
Money Market Securities 80%
Debt Securities 20%
Classification by Constitution
Close ended Funds
These types of funds are open for subscription only once and have a
stipulated maturity period that generally ranges from 3 to 15 years.
Investors can invest in the scheme at the time of the initial public issue and
thereafter they can buy or sell the units of the scheme on the stock
exchanges where such funds are listed.
To provide an exist option to the investors, some close-ended funds give
an option of selling back units to the funds through periodic repurchase at
NAV related prices. SEBI regulations stipulate that at least one of the two
exit routes is given to the investor.
E.g. Morgan Stanley Growth Fund
Open ended Funds
In this category the fund is available for subscription all through the year. It
does not have a fixed maturity. Investors can buy and sell units at a price
related to the fund’s NAV (net asset value). Highly liquid from investors
point of view. Most of the funds offered today are in this category.
Net Asset Value
The investment is denoted as NAV – Net Asset Value
Net Asset Value is defined as the total value of the asset in the underlying
fund minus the expenses paid or to be paid divided by the number of units
issued. The issued value of a unit is usually 10/-.
The Net Asset value of a fund is the indicator of the value of the fund.
The NAV is listed on a daily basis in all the national newspaper. This in
most cases the value of the policy is just newspaper away.
Since there are more than a single fund in a Unit Linked Plan – each fund
will have an NAV.
Example:
If 20000/- have been accumulated in the equity fund. And the number of
units issued is 10000/- then the NAV of the equity fund is
200000 / 10000 = 20/-
As the equity markets develop fund grows from 200000/- to 220000/-
Now the NAV is 220000 / 10000 = 22/-
If among these 10000 units the policy holder has 5000 units then the value
of investment as of now is 110000/-
Thus a unit linked plan actually tells me what is the value of my fund is.
Sale price: Is the price the investor requires while investing in a scheme. It
is also called as Offer Price.
Repurchase Price: Is the price at which a close – ended scheme
repurchases it units.
Redemption price: is the price at which an open-ended scheme
repurchase the units.
Sale Load: is a charge collected by a scheme when it sells the units. Its is
also called as ‘front end’ load. Scheme that do not charge a load are called
‘No Load’ schemes.
ANALYSIS OF INVESTMENT PRODUCTS
Investment Return Safety Volatility Liquidity

Equity High Low High High or low
moderate
FI bonds Moderate High Moderate Moderate
high
Corporate Moderate Moderate Moderate Low
debenture low
Bank Low high High Low High
deposits
Company Moderate Low Low Low
fixed
deposits
PPF Moderate High Low Moderate
high
Life Low High Low Low
insurance moderate
Mutual High High Moderate High
funds
Gold Moderate High Moderate Moderate
low
Real estate High / low Moderate High Low
BASICS OF ULIP
What is a Unit Linked Insurance Plan?

Unit Linked Insurance Plan: A policy which provides for life insurance
where the policy value at any time varies according to the value of the
underlying assets at the time.
Unit Linked Insurance Plans (ULIP) is life insurance solution that provides
the client with the benefits of protection and flexibility in investment.
The investment is denoted as units and is represented by the value that it
has attained called as Net Asset Value (NAV)
Unit Linked Units in Underlying
Insurance funds Investment
Policies
ULIP came into play in the 1960s and became very popular in Western
Europe and Americas. The reason that is attributed to the wide spread
popularity of ULIP is because of the transparency and the flexibility which it
offers to the clients.
As times progressed the plans were also successfully mapped along with
life insurance need to retirement planning.
In today’s time – ULIP provides solutions for all the needs of a client like –
insurance planning, financial needs, financial planning for children’s future
and retirement planning.
An ULIP structure looks like as follows:
Contribution
Less Charge
Investment represented Life Cover

as units
Features of a Unit Linked Plan
ULIP distinguishes itself through the multiple benefits that it provides tot eh
consumer. The plan is a one stop solution providing
1. Life Protection
2. Investment and Savings
3. Flexibility
b) Adjustable Life cover
c) Investment Options
4. Transparency
5. Options to take additional cover against
a) Death due to accident
b) Disability
c) Critical Illness
d) Surgeries
6. Liquidity
7. Tax planning
In today’s fast paced world, the clients need change equally fast. Taking
the above benefits lets see how each gets morphed with situation
changing for the client.
LIFE PROTECTION
Can any of us deny that we do not need life protection? Honestly none can
especially when we see the fatal events that occur so frequently around
us.
However the need may vary and ULIP provides the benefit of adjusting
according to the varying need of the client.
The life insurance needs keep changing throughout the life stage of an
individual
When we start working
When we start a family
When our children start a career
When we retire
This when mapped to life insurance needs gives us a graph:
Therefore as our responsibilities grow the need for life protection grows
and when these responsibilities are successfully executed the need
reduces.
ULIP allows a client to change the varying life protection needs that makes
it
 Easier for the client to manage
 Hassle free
 Economically effective
The death benefit is usually a multiple of the Contribution being paid which
ensures that the contribution is adequate enough to provide life protection
and is also able to maintain a semblance between protection and savings.
In a ULIP the client pays yearly mortality charges, which makes it more
cost effective for the client.
The charge is deducted each year as per the age of the client – therefore
at the age of 30, mortality for the age of 30 is charged and at the age of 31
mortality for the age of 31 is charged.
Investment and Savings
Undoubtedly all of us look for saving the money that we have and to
ensure that the investment that we make should create value for us – and
more the better.
Many life insurance plans present in the market do not provide justice to
this important need of the client. ULIP on the other hand has all the
composition of satisfying investment and savings needs of the clients.
ULIP provides the client with the option of investing as per personal risk
profile and get returns accordingly. There are options of funds where in the
client can put money in
1. Equity Markets
2. Debt Markets
3. Balanced funds with a mix of the above two
4. Short-term debt market
This also helps the client in saving in accordance to the age as a younger
person can afford to take some risk however a senior citizen might not be
in a position to make investment in comparatively high risk investments.
With the option of four funds to invest in the client always has the option to
change shift as the risk and return orientation changes. Subsequent
contributions and contribution can also be allocated in different fund. Such
features ensures that the client is able to use quality fund management for
optimum benefit.
Net Asset Value
In traditional Plans the policyholder is not aware of the value of the policy
is accruing.
In a Unit Linked plan – the investment, which is denoted through a NAV, is
the real time indicator of the value of the fund. Therefore a policyholder
can easily find out that what is the value that the policy has accrued as of
now.
Transparency
Every client has the right to know about the manner in which the
Contribution being given by him is being allocated. The biggest concern
that is raised is about the charges.
ULIP are completely transparent and the client knows as how every paisa
being charges is allocated.
There are various kind of expenses that are involved in any insurance
plan. These expense may be related to the sales and distribution cost, or
the operational costs, the costs related to the life insurance cover or the
costs related to the management of expense. Since all unit-linked plans
have a transparent structure, they have to exhibit all the charges. It may be
worthwhile to know about the various kind of expenses related to a unit-
linked plan.
The various kinds of expenses are detailed below:
Contribution Related Charges : These are charges that are represented
as a percentage of the regular or single contribution paid. In case of a
regular contribution plan, it is usually high in the first year to pay for the
distribution cost. This charge pays for the issuance and for distribution
commissions.
This is a charge to cover the running expenses of the policy. For single
Contribution plans this is levied once at the start of the policy. For regular
Contribution plan this will be charged on a regular uniform basis depending
upon the frequency of payments.
Normally these charges are shown as percentage of the contribution.
Allocation is another terminology used by the company in actually
representing costs.
Allocations are mathematically reverse of the charges. This
mathematically;
Allocation = 1- Charges. This for example is a product has a 70%
allocation in the first year, it means 1- 0.7 = 0.3 or 30% charge.
Administrative Charges: These are charges that are levied for the
administration of the policy and the related costs of administration of the
insurance company, itself. These costs are different from the issuance and
the distribution related costs of the product they are more related to the
costs like the IT, operational, etc. cost of continuing the policy.
i) They can be levied as the percentage of the value of the
investments (funds) in hat account of the policy holder. So for
example, as Baja Allianz levy a charge of 1.25% of the fund for the
administration of the policy, every year. These kinds of charges get
adjusted in the Unit Value (NAV), as the NAV is declared after
adjusting these costs.
ii) They can be levied as a flat charge with an option of increasing it
by a certain percentage over years. For example, Birla levies a flat
charge of Rs. 28 per month on its policy. HDFC SL unit linked plan
levies Rs.180 annually as the administration charges.
Fund Management Fee : All unit linked plans have underlying funds,
which the policy holders choose for their investments. These funds
constitute of various financial instruments such as equity, bonds, money
market instruments.
The fund management fees is levied to pay for the charges of managing
the investments, which basically involve the cost of buying and selling the
various financial instruments for the various funds.
These charges are expressed as a percentage of the Asset Under
Management of the insurance company. So for example, Birla in its create
fund charges 1.25% annually of the AUM, HDFC charges 0.80% for the its
equity fund.
Interesting thing to know here is the factor on which the charges
depend – The main factor being the fund composition
For example, the cost of managing equity. Thus normally, the fund option,
which has higher percentage of equity, would have higher charges
comparatively to other funds.
So for example, where as Birla charges 1.25% of the AUM as the charge
for their Creator fund which has 50% equity (Max) and 50% debt, Aviva’s
Equity Fund with 100% equity option charges 2.00%. Similarly, the debt
fund of Birla, which has 90% debt, charges 1.00% of the AUM as the
annual charge.
Morality charges : This covers the cost of providing life protection for the
insured and may be paid once at the start of the policy or a recurrent
manner (for example). This charge is levied to provide the insurance cover
under the plan. Normally these charges are 1-year charges and keep
changing as per the age of the policy holder.
These are normally expressed as – as thousand of the Sum Assured
and depend on the age of the policyholder. So, for example one would
have the morality charge as Rs. 1.50 per thousand of SA for a 30 year-old
and Rs. 1.55 for the age of 35 years. This means that the cost of insurance
of Rs. 1000 at the age of 30 is 1.50, where the same insurance cover costs
Rs. 1.55 at the age of 35 years.
All unit – linked products have a morality charge table that is used to
calculate the life insurance cover chare on a yearly basis.
Rider Charges : Rider charges are similar in nature to the morality
charges as they are levied to pay for the other protection benefits that the
policy holder has chosen for – like the critical illness benefit or the accident
benefit, etc.
Surrender charges : When the policy decides to surrender the policy or
partially withdraw some of the units for cash, a surrender charge may be
apply. Usually the surrender charges only apply in the first few years after
the units are invested and are usually on the decreasing scale. Surrender
charges are used to cover initial expenses that have been incurred by the
company but not yet covered from the policy holder yet.
These charges can either be expressed as a percentage of the value
of investments or as a fixed flat charge, depending on the structure
of the product.
So, the policy holder may be charge of 2% of the unit value as the
surrender charge or Rs. 1000 as the surrender penalty.
Surrender charges usually apply to policy with high allocation especially in
the first few years.
Bid offer charges : In ULIP specifically certain insurers might create a
difference in the price at which they sell the unit and the price at which they
buy the units.
Investor’s Contributions are used to buy units in the investment fund at the
offer price and are sold when benefits are required at the bid price. The
difference between the offer and bid prices is known as the “bid offer
spread”, this is used to cover expenses when setting up the policy.
Bid-offer spread is expressed as a percentage of the NAV’s and hence
also becomes a percentage of the value of units.
So for example a company has bid-offer spread of 5% and has an offer
price of Rs. 10 per unit. This means that the bid price would be 5% less
and hence 95% of the offer price, i.e. 95%*10 = Rs. 9.50.
Hence, a policyholder having 100 units in his investment would get Rs.
9.5100 = Rs. 950 as his value and if he has to but another 100 units he will
have to pay Rs. 10100 = RS. 1000. This Rs. 50 difference is the bid-offer
spread.
Any fund which has a bid-offer spread would have 2 NAV’s buying and
selling, where as a fund which does not have bid-offer spread is a 1 NAV
fund same for buying and selling.
Transactional Specific charges : These charges are levied when the
client does some specific transaction like changing funds, topping up the
investment component or withdrawals.
Liquidity
This facility makes the ULIP a very practical insurance in current times.
Most Life Insurance plans do not provide the policyholder the facility of
withdrawing money incase the need arises.
Unit Linked Plans provide you easy access to your money as and when
you may require. One can redeem the units after a particular period of time
as defined by the plan, as per the need. ULIP allows either partial and
complete withdrawal, without penalizing the policyholder.
For example in the 6th year of your plan, you require 15000/- for certain
medical expenses that came up.
Your investment has been made in the balance fund. If the current NAV of
the balanced fund is 15/-, then all you need to do is to sell 1000 units
which will give you 15000/-. The rest of the fund and the policy will
continue normally as this is partial withdrawal.
If need be, the policyholder can withdraw all the monies in the funds by
redeeming all the units.
Liquidity thus provided to the policyholder is immense value in servicing
the ever-changing needs of the client.
Tax planning
Regulation in India allow tax benefits in the Contribution paid under section
88. contribution paid for health riders (critical illness and major surgical) is
allowed tax benefit under section 80 D, as per the prevailing tax-laws.
Maturity benefits are tax free under section 10(10) d, provided the life
cover is at least 5 times of the annual Contribution paid.
Death benefit is tax free under section 10 (10) d.
With so many tax benefits available in one instrument – ULIP tends to be
an intelligent tax-planning tool.
Working of a Unit Linked Plan
For example
A client puts in a regular contribution of 20000/-. From this amount a
percentage is deducted as a contribution.
Therefore if the contribution related expense is 20% - Rs. 4000/- will be
deduced as contribution related charges.
The amount that is now available is 20000 – 4000 – 16000/-
Now, it the client who is aged 30 years were to take a life cover of
500000/- then mortality (1.50/- per thousand at the age of 30) charge of
750/- will be deducted.
This amount will provide life cover to the policyholder. The remaining
amount of – 15250/- will be invested in any of the underlying funds i.e.
debt, equity or mix of both the two. The client can invest in any one of them
or all of them.
The investment is showed in terms of units. Thus if the client invests in
debt fund and the NAV of the debt fund is 16/- (market price) then the
number of units that the client will get is 15250/16=953.125 for the
investment – fund management fee will be charged and the for maintaining
the policy an administrative charge is levied.
CHOICE OF FUND
There are four fund options available to the policyholders. The policyholder
has the flexibility of investing in all the four funds in the proportion the
wishes under our single policy. Following are the fund options.
Plan Plan objective Risk Investment patterns
Steady returns over a Debt Instruments :
Protector long-term Max 100% Money
Moderate
(Income) market & cash : Max
25%
Balance of Capital Debt, money market &
Balancer appreciation and cash : Min 60% equity
Average
(Balanced) steady returns over a & equity related
long-term security : Max 40%
High growth and Equity & Equity
capital appreciation related security :Max
Maximiser
over a long term High 100% debt, money
(Growth)
market & Cash : Max
25%
Capital preservation Debt market : max
Preserver
Low 50% money market &
(Liquid)
cash : min 50%
Switch between the funds

The policyholder would have the control to direct his investment depending
upon the market conditions by switching the money between the funds.
UNIT LINKED LIFE FUNDS PERFORMANCE
Maximiser Plan Details

Portfolio Allocation as on December 31, 2004
Name Industry % Net Assets
EQUITY
OIL & GAS 16.48%
ONGC CORPORATION LTD. 5.42%
BHARAT PETROLEUM CORP LTD. 3.05%
GAS AUTHORITY OF INDIA 3.36%
HPCL 2.41%
INDIAN OILCORPORATION LIMITED 1.44%
CHENNAI PETROLEUM CORPORATION LTD. 0.80%
FINANCE 14.96%
STATE BANK OF INDIA 4.18%
HDFC BANK 4.19%
HDFC LIMITED 3.88%
UTI BANK 2.30%
ORIENTAL BANK OF COMMERCE 0.41%
METALS 9.45%
HINDALCO INDUSTRIES LIMITED 4.84%
TATA IRON & STEEL COPANY LIMITEED 3.73%
NATIONAL ALLUMINIUM COMPANY LIMITED 0.88%
CHEMICALS 9.21%
RELIANCE INDUSTRIES LIMITED 9.21%
CEMENT & CONGLOMERATES 7.80%
GUJRAT AMBUJA CEMENTS LIMITED 3.27%
ASSOCIATED CEMENT COMPANIES LIMITED 2.43%
GRASIM INDUSTRIES LTD. 2.10%
CAPITAL GOODS 7.14%
BHARAT HEAVY ELECTRICALS LIMITED 4.70%
LARSEN AND TUBRO LIMITED 1.00%
ASEA BROWN BOVERI LIMITED 1.44%
SOFTWARE 6.47%
INFOSYS TECHNOLOGIES LTD 4.40%
WIPRO LIMITED 1.16%
TATA CONSULTANCY SERVICES LTD. 0.91%
FMCG 6.93%
ITC LTD 5.93%
COLGATE PALMOLIVE INDIA LIMITED 0.57%
MARICO INDUSTRIES LTD 0.44%
DRUGS & PHARMACEUTICALS 5.12%
CIPLA LTD 2.29%
SUN PHARMA LTD 1.74%
RANBAXY LABORATORIES LTD. 1.09%
TELECOM & MEDIA 4.98%
BHARTI TELE VENTURES LTD. 4.98%
AUTO 3.35%
MAHINDRA & MAHINDRA LTD. 1.8%
TATA MOTORS 0.64%
PUNJAB TRACTORS LTD. 0.91%
MISCELLANEOUS 2.22%
G.D. SHIPPING 1.50%
CENTURY TEXTILE LIMITED 0.72%
TOTAL 94.11%
ACCRUED INTEREST/CASH/CALL/MONEY AT SHORT NOTICE/OTHER 5.89%
NET CURRENT ASSETS
Portfolio Classification by Asset Class
6%
Equity
Call / Current
Assets
94%
Period ICICI Pru Benchmark

1 year 17.02% 14.41%
3 yrs (annualized) 39.13% 26.13%
Since Inception(16 Nov, 01) annualised 42.31% N.A
Benchmark : BSE 100

Balancer Plan Details

EQUITY
OIL & GAS 6.78%
HPCL 0.95%
FINANCE 6.15%
HDFC BANK 1.62%
HDFC LIMITED 1.53%
UTI BANK 0.90%
METALS 3.97%
CHEMICALS 3.86%
CAPITAL GOODS 2.73%%
BHARAT HEAVY ELECTRICALS LIMITED 1.80%%
LARSEN AND TUBRO LIMITED 0.46%%
SOFTWARE 2.62%
WIPRO LIMITED 0.63%
FMCG 2.24%
ITC LTD 1.97%
CIPLA LTD 0.84%
AUTO 1.44%
TATA MOTORS 0.26%
MISCELLANEOUS 1.02%
G.D. SHIPPING 0.69%
TOTAL 37.42%
Name Rating % Net Assets
DEBENTURES / BONDS
RELIANCE INDUSTRIES AAA 2.59%
INDIAN RAILWAY FINANCE CORPORATION AAA 2.43%
HINDUSTAN PETROLEUM CORPRATION AAA 2.07%
RURAL ELECTRIFICATION CORPORATION AAA 1.96%
NABARD AAA 1.95%
HINDALCO AAA 1.41%
G CAPITAL AAA 1.13%
CITIFINANCIALCONSUMER AAA 0.91%
EXIM BANK AAA 0.83%
GRASIM INDUSTIRES AAA 0.75%
POWER FINANCE CORPORATION AAA 0.62%
HDFC AAA 0.62%
IDFC AAA 0.42%
SBI AAA 0.30%
BHARAT PETROLEUM CORPORATION AAA 0.12%
BHARAT HEAVY ELECTRICAL AAA 0.12%
NATIONAL THERMAL POWER CORPORATION AAA 0.12%
IDBI AA+ 3.61%
GUJARAT AMBUJA CEMENT AA+ 0.18%
TATA CHEMICALS AA+ 0.09%
INDIAN PETROCHEMICAL CORPORATION AA 0.08%
TOTAL 22.30%
GOVERNMENT SECURITIES
TREASURY BILLS Sovereign 10.55%
7.38% GOI 2015 Sovereign 7.50%
11.19% GOI 2005 Sovereign 4.95%
7.55 GOI 2010 Sovereign 3.53%
6.96% OIL COMPANIES SPECIAL BOND 2009 Sovereign 0.46%
TOTAL 31.82%
Bank Fixed Deposits 3.01%
ACCRUED INTEREST /CASH/CALL/ MONEY AT 5.45%
SHORT NOTICE/OTHER NET CURRENT
ASSETS
Equity
Period ICICI Benchmark
5% Government Pru
Securities One year 6.67% 5.73%
4% 3%
Corp Bonds - AAA Three years 18.96% 13.48%
18% 38% (Annualised)
& eq.
Since 22.48% NA
Corp Bonds - AA +
Inception
& eq.
32% (NOV 16-01)
Call / Current (Annualised)
Assets
65% CRISIL Composite Bond Index + 35% BSE 100
FD with Banks
Protector plan details
DEBENTURES / BONDS
EXIM BANK AAA 2.55%
HINDALCO AAA 2.49%
CITIFINANCIAL CONSUMER AAA 2.27%
HINDUSTAN PETROLEUM CORPORATION AAA 2.22%
HDFC AAA 1.84%
BHARAT HEAVY ELECTRICALS AAA 1.60%
GE CAPITAL AAA 1.57%
IDFC AAA 0.90%
SBI AAA 0.46%
NALCO AAA 0.31%
NABARD AAA 0.07%
IDBI AA+ 6.05%
TOTAL 42.75%
Treasury Bills Sovereign 14.68%
7.38% GOI 2015 Sovereign 12.54%
11.19% GOI 2005 Sovereign 1.87%
Total 43.31%

ACCURED INTEREST CASH/CALL/MONEY AT 7.72%
ASSETS
Government Period ICICI Benchmark

Securities Pru
8% Corp Bonds - AAA One year 0.01% 0.18%
6%
& eq. Three years 7.58% 6.82%
8% 43% (Annualised)
Corp Bonds - AA +
& eq. Since 11.03% NA
35% Call / Current Inception
Assets (NOV 16-01)
FD with Banks (Annualised)
CRISIL Composite Bond Index
Preserver plan details

DEBENTURES / BONDS
HDFC AAA 10.27%
IDBI AA+ 10.90%
TOTAL 21.17%
Total 77.62%
ACCRUED INTEREST/CASH/CALL/MONEY AT 1.20%

ASSETS
Government
Securities
11% 1%
10% Corp Bonds - AAA
& eq.
Corp Bonds - AA +
78% & eq.
Call / Current
Assets

Since Inception (May 17, 04) 4.96% 4.17%
(Absolute)
UNIT LINKED PENSION FUNDS PERFORMANCE
Pension Maximiser Plan Details

EQUITY
OIL & GAS 18.13%
HPCL 2.96%
FINANCE 14.41%
HDFC BANK 4.30%
HDFC LIMITED 3.80%
UTI BANK 1.64%
METALS 10.04%
CHEMICALS 8.71%
CAPITAL GOODS 7.29%
SOFTWARE 6.30%
WIPRO LIMITED 0.94%
FMCG 5.81%
ITC LTD 5.14%
CIPLA LTD 1.88%
AUTO 3.27%
TATA MOTORS 0.57%
MISCELLANEOUS 2.65%
G.D. SHIPPING 1.78%
TOTAL 93.40%
ACCRUED INTEREST/CASH/CALL/MONEY AT SHORT NOTICE/OTHER 6.60%
NET CURRENT ASSETS
7%
Equity
Call / Current
Assets
93%

One year 16.89% 14.41%
Two years (Annualized) 63.92% 53.55%
Since Inception(JUN – 1.02) 49.41% 33.33%
(Annualized)
Pension Balancer Plan Details

EQUITY
OIL & GAS 6.88%
HPCL 0.79%
FINANCE 5.74%
HDFC BANK 1.32%
HDFC LIMITED 1.46%
UTI BANK 0.61%
METALS 4.28%
CHEMICALS 3.62%
CAPITAL GOODS 3.33%
SOFTWARE 2.46%
WIPRO LIMITED 0.40%
FMCG 2.15%
ITC LTD 1.97%
CIPLA LTD 0.69%
AUTO 1.48%
TATA MOTORS 0.28%
MISCELLANEOUS 1.39%
G.D. SHIPPING 0.92%
TOTAL 37.82%
DEBENTURES / BONDS
HINDUSTAN PETROLEUM CORPORATION 1.77%
HINDALCO AAA 1.59%
HDFC AAA 1.50%
CITIFINANCIALCONSUMER AAA 1.20%
EXIM BANK AAA 0.99%
IDFC AAA 0.73%
GRASIM INDUSTRIES AAA 0.50%
SBI AAA 0.45%
NABARD AAA 0.15%
IDBI AA+ 4.40%
TOTAL 22.77%
TREASURY BILLS Sovereign 13.04%
11.19% GOI 2005 Sovereign 2.91%
7.55 GOI 2010 Sovereign 1.68%
TOTAL 29.43%
ACCRUED INTEREST /CASH/CALL/ MONEY AT 6.73%
ASSETS
Equity
Government Pru
7%
5% 3% Last Two 25.03% 19.15%
Corp Bonds - AAA
38% years
18% & eq.
(Annualised)
Corp Bonds - AA
Since 22.50% 15.68%
& eq.
29% Inception (Jun
Call / Current 1-02)
Assets (Annualised)
FD with Banks
65% CRISIL Composite Bond Index + 35% BSE 100
Pension Protector Plan Details

DEBENTURES / BONDS
EXIM BANK AAA 2.62%
HINDALCO AAA 2.47%
CITIFINANCIAL CONSUMER AAA 2.30%
HINDUSTAN PETROLEUM CORPORATION AAA 1.75%
HDFC AAA 1.33%
GE CAPITAL AAA 1.10%
IDFC AAA 1.02%
SBI AAA 0.8%
NALCO AAA 0.24%
NABARD AAA 0.12%
IDBI AA+ 7.35%
TOTAL 44.49%
7.38% GOI 2015 Sovereign 12.24%
11.19% GOI 2005 Sovereign 3.56%
11.40%GOI 2008 Sovereign 0.37%
Total 43.96%
ACCURED INTEREST CASH/CALL/MONEY AT 5.33%
ASSETS

Government Pru
5% Corp Bonds - AAA Two years 4.70% 4.51%
6%
& eq. (Annualised)
9% 44% Corp Bonds - AA + Since 8.14% 7.08%
& eq. Inception (Jun
Call / Current
1-02)
36%
Assets (Annualised)
CRISIL Composite Bond Index
FD with Banks
Pension Preserver Plan Details
DEBENTURES / BONDS
HDFC AAA 11.72%
IDBI AA+ 11.87%
TOTAL 23.59%
Total 72.39%
ACCRUED INTEREST/CASH/CALL/MONEY AT 4.02%

ASSETS
Government
Securities
12% 4%
Corp Bonds - AAA
12% & eq.
Corp Bonds - AA +
72% eq.
Call / Current
Assets

Since Inception (May 17, 04) 4.42% 4.17%
Absolute
INSURANCE OPPORTUNITY
ICICI Pru
7%
10% Max NYL
3% HDFC Std. Life
39%
4% Birla Sunlife
Allianz Bajaj
8% Om Kotak
12% SBI Life

10% 7%
Tata AIG
Others
INSURANCE OPPORTUNITY : LOW PENETRATION
12
10.7
10
Ins. Premium as a % of GDP
8.9 8.7
8
6
4.4
4 3.4
2.2
2 1.3
0
UK Japan South United Malaysia India China
Korea States
KEY BUSINESS ASSETS
Risk Framework
Distribution Product
• Present in 54 locations Complete array of
• About 38,000 agents products with a
• 12 Bancassuance partners successful linked &
pensions products strategy
Technology People
• To provide differential  Built a talent pool
sales & service experience to sustain leadership position

What statistics says………
Cover up New business ’04 – 05’
Company Premium (Rs. Cr) Policies
Tata AIG 300.22 228894
OM Kotak 374.75 63468
Birla Sun Life 621.28 198370
Max New York 224.69 216671
ING Vysya 281.62 111141
HDFC standard 486.15 206320
Met Life 56.03 46682
Bajaj Allianz 800.01 288191
ICICI Prudential 1584.08 614673
SBI 482.93 129974
Aviva 192.29 83209
AMP Sanmar 91.18 35268
Sahara Life 167.09 10214
LIC 19785.9 24027393
TOTAL
THE COMPANY
ICICI Prudential Life Insurance Company is a joint venture between ICICI
Bank, a premium financial powerhouse, and Prudential plc, a leading
international financial services group headquartered in the United
Kingdom. ICICI Prudential was amongst the first private sector insurance
companies to begin operations in December 2000 after receiving approval
from Insurance Regulatory Development Authority (IRDA).
ICICI Prudential equity base stands at Rs. 925 crore with ICICI Bank and
Prudential plc holding 74% and 26% stake respectively. In the period April
– December 2004, the company garnered Rs. 860 crore of new business
premium for a total sum assured of over Rs. 7360 crore and wrote nearly
345000 policies. Today the company is the No. 1 private life insurer in the
country.
Distribution
ICICI Prudential has one of the largest distribution networks amongst
private life insurer in India, having commenced operations in 69 cities and
towns in India. These are :Agar, Ahmedabad, Ajmer, Allahabad, Amritsar,
Aurangabad, Banglore, Bareilly, Bhatinda, Bhopal, Bhubhaneshwar,
Calicut, Chandigarh, Chennai, Coimbatore, Dehradun, Durgapur,
Faridabad, Goa, Guntur, Gurgaon, Guwahati, Gwalior, Hyderabad, Hubli,
Indore, Jaipur, Jalandhar, Jamnagar, Jamshedpur, Jodhpur, Kanpur,
Karnal, Kochi, Kolkata, Kolhapur, Kota, Kottayam, Lucknow, Ludhiana,
Madurai, Mangalore, Meerut, Mumbai, Mysore, Nagour, Nasik, Noida, New
Delhi, Patiala, Pune, Raupur, Rajkot, Ranchi, Rourkela, Salem, Siliguri,
Surat, Thane, Thrissur, Trichy, Trivandrum, Udaipur, Vadodara, Vapi,
Varanasi, Vashi, Vijayawada and Vizag.
The company has seven bancassurance tie-ups, having agreements with
ICICI Bank, Federal Bank, South Indian Bank, Bank of India, Lord Krishna
Bank and some co-operative banks, as well as over 160 corporate agents
and brokers. It has also tied up with organizations like Dhan for distribution
of Salaam Zindagi, a policy for the socially and economically under
priviledged sections of society.
ICICI Prudential has recruited and trained about 50,000 insurance advisors
to interface with a advise customers. Further, it leverages its state-of-art IT
infrastructure to provide superior quality of service to customers.
PRODUCTS
Insurance solutions for individuals
ICICI Prudential Life Insurance offers a range of innovative, customer-
centric products that meet the needs of customers at every life state. Its 20
products can be enhanced with up to 6 riders, to create a customized
solutions for each policyholder.
Saving Solutions
• SecurePlus is a transparent, feature-packed saving plan that offers
3 levels of protection.
• CashPlus is a transparent, feature-packed savings plan that offer 3
levels of protection as well as liquidity options.
• Save ‘n’ Protect is a traditional endowment savings plan that offers
life protection along with adequate returns.
• CashBak is an anticipated endowment policy ideal for meeting
milestone expense like a child’s marriage, expenses for a child’s
higher education or purchase of an asset.
• LiftTime & LifeTime II often customers the flexibility and control to
customize the policy to meet the changing needs at different life
stages. Each offer 4 fund options – Preserves, Protector, Balance
and Maximiser.
• LifeLink II is a single premium Market Linked Insurance Plan which
combines life insurance cover with the opportunity to stay invested in
the stock market.
• Premier Life is a limited premium paying plan that offers customers
life insurance cover till the age of 75.
• InvestShield Life is a Market Linked plan that provides capital
guarantee on the invested premium and declared bonus interest.
• InvestShield Cash is a Market Linked plan that provides capital
guarantee on the invested premium and declared bonus interest
along with flexible liquidity options.
• InvestShield Gold is a Market Linked plan that provides capital
guarantee on the invested premium and declared bonus interest
along with limited premium payment terms.
Protection Solutions
• LifeGuard is a protection plan, which offers life cover at very low
cost. It is available in 3 options – level term assurance, level term
assurance with return of premium and single premium.
Child Plans
• SmartKid education plans provide guaranteed educational benefit to
a child along with life insurance cover for the parent who purchases
the policy. The policy is designed to provide money at important
milestones in the child’s life. Smartkid plans are also available in
unit-linked form – both single premium and regular premium.
Retirement Solutions
• ForeverLife is a retirement product targeted at individual in their
thirties.
• SecurePlus Pension is a flexible pension plan that allows one to
select between 3 levels of cover.
Market Linked retirement products
• LifeTime Pension II is a regular premium market-linked pension
plan.
• LifeLink Pension II is a single premium market-linked pension plan.
• InvestShield Pension is a regular premium pension plan with a
capital guarantee on the invistible premium and declared bonuses.
ICICI Prudential also launched “Salaam Zindagi”, a social group
insurance policy targeted at the economically underprivileged sections of
the society.
Group Insurance Solution
ICICI Prudential also offers Group Insurance Solutions for companies
seeking to enhance benefits to their employees.
ICICI Pru Group Gratuity Plan : ICICI Pru’s group gratuity plan helps
employers fund their statutory gratuity obligations in a scientific manner.
The plan can also be customized to structure schemes that can provide
benefit beyond the statutory obligations.
ICICI Pru Group Superannuation Plan : ICICI Pru offers a flexible
defined contribution superannuation scheme to provide a retirement kitty
for each member of the group. Employees have the option of choosing
from various annuity options or opting for a partial commutation of the
annuity at the time of retirement.
ICICI Pru Group Term Plan : ICICI Pru’s flexible group term solution
helps provide affordable cover to members of a group. The cover could be
uniform or based on designation/rank of a multiple of salary. The benefit
under the policy is paid to the beneficiary nominated by the member on
his/her death.
Flexible Rider Options
ICICI Pru Life offers flexible riders, which can be added to the basically
policy at a marginal cost, depending on the specific needs of the customer.
1. Accident & disability benefit : If death occur as the result of an
accident during the term of the policy, the beneficiary receives an
additional amount equal to the sum transport vehicle, the beneficiary
will be entitled to twice the sum assured as additional benefit.
2. Accident Benefit : This rider option pays the sum assured under
the rider on death due to accident.
3. Critical Illness Benefit : Protects the insured against financial loss
in the event of 9 specified critical illness. Benefits are payable to the
insured for medical expenses prior to death.
4. Major Surgical Assistance Benefit : Provides financial support in
the event of medical emergencies, ensuring benefits are payable to
the life assured for medical expenses incurred for surgical
procedures. Cover is offer against 43 surgical procedures.
5. Income Benefit : This rider pays the 10% of the sum assured to the
nominee every year, till maturity, in the event of the death of the life
assured. It is available on SmarKid, SecurePlus and CashPlus.
6. Waiver of Premium : In case of the total and permanent disability
due to an accident, the premium are waived till maturity. This rider is
available with SecurePlus and CashPlus.
ACCOLADES
• Outlook money awards of the best life insurance of 2003-04
Second time in a row
• 2004 Institute of Marketing & Management Award for Excellence
• “The Most Trusted Private Life Insurer”
The Economic Times AC Nielsen Survey 2003
• Superbrand
Only private life insurer
KEY BUSINESS GOALS

• Market Share
Move from 39% to 50%
• HNI Focus
Move from 4.3% - 6.5%
Average premium of Rs. 20300
• Product Focus
Pensions to contribute 40% by numbers
New product to contribute 15% of premium.
• Group business
7 to amongst top 3
Our differentiators will continue to be ……..
• Customer – centric approach
• Brand – our competitive edge
• World class quality and people
• Distribution focus
• Investment management practices
ABOUT THE PROMOTERS
ICICI Bank is India’s second – largest bank with total assets of about Rs.
112,024 crore and a network of about 450 branches and offices and about
1750 ATMs. If offers a wide range of banking products and financial
services to corporate and retail customers through a variety of delivery
channels and through its specialized subsidiaries and affiliates in the area
of Investment Banking, Life and Non Insurance, Venture Capital, Assets
Management and Information Technology. ICICI bank posted a net profit of
Rs. 1637 crore for the year ended March 31, 2004. ICICI Bank’s equity
shares are listed in India on stock exchanges at Chennai, Delhi, Kolkata
and Vadodara, the stock exchange, Mumbai and the National Stock
Exchange, Mumbai and the Nation Stock Exchange of India Limited and its
American Depository Receipts (ADRs) are listed on the New York Stock
Exchange (NYSE).
Established in London in 1848, Prudential plc, through its business in the
UK and Europe, the US and Asia, provides retail financial services
products and services to more than s16 million customers, policyholder
and unit holder worldwide. As of June 30,2004 the company had over US $
300 billion in funds under management. Prudential has brought to market
an integrated range of financial services products that now includes LIFE
ASSURANCE, PENSIONS, MUTUAL FUNDS, BANKING, INVESTMENT
MANAGEMENT and GENERAL INSURANCE. In Asia, Prudential is the
leading European Life Insurance Company with a vast network of 24 life
and mutual fund operations in twelve countries – China, HongKong, India,
Indonesia, Japan, Korea, Malaysia, the Phillippines, Singapore, Taiwan,
Thailand and Vientam.
VISION
To be the dominant new player in the Life Insurance Industry
This will be achieved through:
• Recruitment of quality advisors
• Intensive product training
• Selling skills training
• Superior technology & processes
• Innovative financial solutions
Introduction
To
The Company
Bibliography
Conclusion
Recommendations
&
Suggestions
SWOT
Analysis
Research
Methodology
Introduction
To
The Topic

Icici Pru Investment

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INVESTMENT PHILOSOPHY

GURU NANAK DEV UNIVERSITY, AMRITSAR

Submitted To: Prepared By:

GEETA MONEY VISHVJEET SINGH

Submitted through the principal:

Saint Soldier College,Hadiabad

1. Introduction to the Company

2. Introduction to the Topic

5. Recommendations & Suggestions

Asset Allocation Risk management

Maximize Target superior

We do not have any dedicated in house research. This is not warranted

Investment Deal Flow

 Investment Operations  Segregates control and Execution

 Custodian  Deal settlement Fund Accounting / NAV Calculation

There are today 28 Asset Management Companies in India holding Total

MUTUAL FUND’S RISK – RETURN MATRIX

Investment Advisor/ Distributor

Custodian Independent Transfer agents

Money Market / Liquid Funds

Investment Return Safety Volatility Liquidity

What is a Unit Linked Insurance Plan?

Investment represented Life Cover

Switch between the funds

Maximiser Plan Details

Period ICICI Pru Benchmark

3 yrs (annualized) 39.13% 26.13%

Since Inception(16 Nov, 01) annualised 42.31% N.A

Benchmark : BSE 100

Portfolio Allocation as on December 31, 2004

Portfolio Classification by Asset Class

Bank Fixed Deposits 6.22%

Portfolio Classification by Asset Class

Government Period ICICI Benchmark

Portfolio Allocation as on December 31, 2004

ACCRUED INTEREST/CASH/CALL/MONEY AT 1.20%

Portfolio Classification by Asset Class

Period ICICI Pru Benchmark

Pension Maximiser Plan Details

Portfolio Allocation as on December 31, 2004

Period ICICI Pru Benchmark

Two years (Annualized) 63.92% 53.55%

Since Inception(JUN – 1.02) 49.41% 33.33%

Portfolio Allocation as on December 31, 2004

Portfolio Classification by Asset Class

Portfolio Allocation as on December 31, 2004

Portfolio Classification by Asset Class

Period ICICI Benchmark

ACCRUED INTEREST/CASH/CALL/MONEY AT 4.02%

Portfolio Classification by Asset Class

Period ICICI Pru Benchmark

12% SBI Life

INSURANCE OPPORTUNITY : LOW PENETRATION

• Present in 54 locations Complete array of

• About 38,000 agents products with a

• 12 Bancassuance partners successful linked &

pensions products strategy

• To provide differential  Built a talent pool

sales & service experience to sustain leadership position

KEY BUSINESS GOALS

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